Owning your own car is not only a privilege, but can also be a valuable necessity that can take you back and forth to work, shopping, and where to go. However, if you’re one of the growing number of borrowers in the United States who have a less-than-perfect credit score, you’ll likely feel that owning a car is out of your reach. Fortunately, even those borrowers with damaged credit can still apply for and be approved for the bad credit card loans they desperately need and want.
Fortunately, there are special lenders who are less concerned about your FICO credit score than about your actual and demonstrable ability to repay it when they lend you money to buy a car or other car. These lenders are used to working with borrowers who, for one reason or another, have less than the desired credit score for traditional loans. These lenders focus on your length of employment and the amount of money you take home (including your spouse’s or life partner’s income if they apply for car loans in addition to the bad credit) when making a decision about whether or not you’re worthy under their guidelines.
Interest rates on your bad loan car loan
Before you apply for your bad credit car loan, you should know in advance that you will get a higher interest rate than a typical borrower with better credit due to your bad credit history or overdue loan. To lower the interest rate that is valued on your bad loan car loan, you have two options. You can save a deposit to apply to the purchase price of the car or other vehicle. By reducing the total amount you used to buy the car, you often reduce the interest rate that the lender charges.
Another option is to apply for your bad credit car loan with the added benefit of a co-signer who has good credit. If you have a co-signer who has shown appealing credit performance, your bad credit credit servicer will consider your application for a loan to be less risky than if you had applied without the additional security of a co-signer. Or you can simply consider the extra interest you pay as an investment in improving your credit score.
Building Your Credit Score with a Bad Credit Car Loan
Once you’ve received the proceeds of your bad loan car loan, you’ll have the perfect opportunity to start rebuilding your loan file. By making timely and regular payments and following the terms of your bad loan agreement, you can add valuable points to your FICO credit score that form a foundation for better loans in the future, written on more favorable terms. In this regard, your bad credit car loan will not only help you get the car you need, but will help you regain your financial freedom and end your bad credit problems.
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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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