Most people will get financing when they want to purchase a new or used car. Unless you are able to buy the car in cash, you will have to borrow money by applying for an auto loan. Getting a loan can be tough for people whose credit report is not impressive and have a poor credit score. There may be financial problems or sudden illness that have caused your credit score to drop. You don’t need to worry about not being able to get approved for an auto loan because there are a lot of auto loan creditors that would give a second chance to people with poor credit.
Requirement for Bad Credit Auto Loans
You will surely be able to find a lot of auto loan options if you have bad credit, bankruptcy record, or no credit history. Basically, bad credit loans means there is no need for any background check. The only requirement is that you must have a job with sufficient income to cover the loans monthly repayment and that you should be employed in the past 3 – 6 months.
Check Your Credit Score
The first step to obtaining a bad credit loan is to check the credit score yourself. If someone tells you that your credit score rating is poor, there is a chance that it isn’t true until you request the credit report from the credit bureau and check it yourself. Even if your credit score is damaged, there are some lenders that may overlook on this and approve your loan.
How Online Bad Credit Loans Work
The fastest way to apply an auto loan is to apply it online. You can visit the auto loan site to fill in the loan request application form. You won’t be charged with any fee for submitting the online application.
It is very secure to apply for the auto loan online as your personal information is being encrypted. By signing up online, you won’t have to waste time traveling to each of the local dealers only to get rejected.
Signing up online does not mean that you are under an obligation to apply the auto loan. You have no obligation until you pen down your signature on the auto loan agreement. After you have submitted the auto loan request application, you can expect to receive a reply at the email your specified on whether your application is approved. If your loan application is approved, you can expect to receive phone calls from up to 4 auto dealers.
There is no need to activate the auto loan after you receive the loan decision. If you receive the loan decision, it means that you have been pre-approved. The pre-approval of the auto loan is valid for 30 days. You will receive a package that contains instructions on how you can check your loan online, documentation that you must bring to the car dealer and guidelines on purchasing the vehicle.
The next step is to visit the local dealership to test drive the car that you are interested in buying. The car dealer will attempt to verify your identity by checking the documents that you bring such as driving license, utility bill. The dealer will let you know how much down payment you need to put, the monthly repayment amount and the interest rate that you will be charged for the auto loan.
If you plan to purchase a used car, make sure the used car that you choose meet the requirement in the loan packet you received. For example, you should check to see if the manufacturing year of the vehicle and vehicle mileage meets the guideline in the loan packet. You can bargain with the dealer to lower the price for the vehicle that you choose before finalizing the transaction.
Once the transaction is finalized, you will be given the car key and you can drive the new car home. You don’t have to wait for some time to receive the car. Most of time, the car dealership will allow you to drive the car away on the same day that you sign the agreement to finalize the car purchase transaction.
If you are employed by an employer with a fixed salary, it is easier to get approved for the auto loan. If you are self employed, you have to provide a proof that you are earning a sufficient income. Based on your income, the search engine at the auto loan site will perform a search on lenders that will finance your auto loan.
If you found a lender, you will have to upload a few documents including the latest payslips of the past two months, address proof for example utility bill and ID card. If your friend recommend you to apply the auto loan from the specific lender, you can mention them in references.
Interest Rate and Down Payment
Most bad credit auto loans have high interest rates but there are some that offer reasonable interest fees just like ordinary auto loans. Paying a higher down payment can reduce the amount that you borrow in the auto loan and subsequently lower the monthly repayment amount. If you want to save money in the long term, you must put a high down payment.
Trading in Your Old Car for the New Car Purchase
Another way to reduce the monthly repayment amount is to trade in your old car. The value of your old car in the market will be deducted from the value of the new car that you want to purchase. The car dealer will assess the value of your old car based on a number of factors.
Getting a Cosigner
It is not necessary to get a cosigner but getting a cosigner can help you to reduce the interest rate and lower the amount you have to repay back monthly. Anyone can be your cosigner as long as the person has a job with regular income and good credit score.
In conclusion, there is no need to be hopeless when you get turned down for the auto loans many times because you can easily get approved for an auto loan when you sign up for the bad credit auto loan online. The process of signing up for the bad credit auto loan is fast and you can be driving home a new car in a few days from the time you submit the auto loan online application.