A bad loan car loan is intended for those who buy a car with unfavorable credit. If your credit score is low, then you might have trouble securing a car loan — but don’t get too depressed because there are companies that understand your problems and are willing to offer you a loan.
Many people are in a difficult situation through no fault of their own, and this is happening more and more often lately because the country has never really recovered from the subprime mortgage fiasco. Because some greedy bankers have decided to give mortgages to people who obviously couldn’t afford them, people like you are suffering from the crash in stock prices and increased unemployment.
Reasons for the need for a bad credit car loan
Young people want to buy a car and find it difficult because their credit is shot because their savings have lost their value. Mortgage lenders became more sensitive to what they lent to whom, and young couples bore the brunt of it. Many found themselves with a bad credit score just because their parents, who lived at the same address, could no longer afford their mortgage.
Others without insurance were sick or had an accident and could not work. Some had to give up their jobs to take care of their children after losing a spouse, and still others were made unemployed. There are many reasons why people are unable to pay their bills for a while, and this passes to their credit score, no matter what the reason.
You may have been offered a new job where you need your own car, or you may have been offered to work at a good distance from your home, where a car is the only way to get there on time. You have to buy a car, but you can’t afford the money to pay for it. You need a loan – a bad credit car loan, as they are called. Most lenders will reject you.
Buying a car with unfavorable credit
Do not despair, because there is a way out for you. Some banks and lenders are still willing to offer you a bad loan car loan – buying a car with unfavorable credit scores is no longer impossible. Why? Why would a lender offer money to someone with bad credit to buy a car?
It’s all in the balance between your ability to repay the loan and the security you can offer. The security is needed in case you stop paying, in which case the lender must have another way to win back his investment. That’s what a loan is to a lender — an investment. You make money from the interest you pay to get the loan. If you can’t pay, they must have some form of security that covers at least the principal amount lent to you.
That could be your home, the car itself, or any other item you own. If you’re already paying for a car loan, then you could refinance it at a lower interest rate over a longer period of time – this would reduce your monthly repayments.
However, if you are looking for a new bad loan car loan, buying a car with unfavorable credit is still possible. Depending on the company you are dealing with, you could be charged a higher interest rate than normal, so the risk to the lender is spread between any adverse loan loans. Your loan could be secured on your home, or your vehicle could serve as collateral. If you do not make your repayments, the car will be taken back into possession.
Extenuating circumstances
A low credit score or a bad credit score doesn’t mean you can’t get a car loan. You may be offered a bad loan car loan if there are mitigating circumstances for your poor credit score. Unemployment, for example, is a valid reason for the default of previous loan agreements, and you may have now resumed full-time work.
Your wife or husband may have stopped working for a reason — to care for a new baby or because of illness. Perhaps you have taken steps to mitigate the effects of this loss of income and feel like you can now afford a car.
Even without such a weakening, the purchase of a card with unfavorable balance is not impossible. In fact, it can be pretty easy to arrange if you find an understanding lender. A bad credit car loan can help you get back to work by providing you with transportation, and there are online companies to help you with that.
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Wendy is now a financial analyst and writer. Wendy has been writing about finance and personal finance since she was a sophomore in high school. She has also been writing for several online publications and published in The Huffington Post, and Forbes Woman.
Wendy is a credentialed financial analyst and has experience working with financial institutions and businesses. Wendy is also a certified financial planner. When Wendy's not writing, she enjoys tending to her many plants, watching TV, and spending time with her family.
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