BAD CREDIT AUTO LOANS

A new report from Experian Automotive has revealed lenders are offering borrowers more subprime auto loans. This is a noted reversal from the cautious approach they’d taken several years ago after losing money during the financial crisis.

Subprime Loans Make Up 40 Percent of All Loans

Having bad credit undoubtedly makes life difficult when trying to make major purchases that require a loan. So of course, if you have bad credit and want to purchase a car, you’re probably going to have a difficult time getting approved for standard car financing.

While some prospective car buyers have turned to bad credit auto loans to get the cars they want, others have considered rent-to-own cars as an option if they are having a difficult time securing an affordable auto loan. If you have heard about rent-to-own cars, take time to learn more about them and whether they are something you might consider for yourself.

For the first time since the financial crisis, people with a credit score below 680 are able to get their hands on new car loans again. Some are even obtaining loans for larger amounts than in previous years. While it’s great that individuals in need have access to reliable vehicles again, some concern has been expressed over the possibility of more loan defaults as a result of the increased leniency in borrowing standards.

Is it possible that loosening up too much result in more people taking on debt they can’t handle? Could giving people with lower credit scores access to a subprime loan cause more problems than it fixes?

When you have bad credit, it seems there aren’t many auto loan options you qualify for, including low auto loans rates on your auto loan. This is not exactly the case, however. While it may be next to impossible to secure a home loan when your credit is poor, you should be able to get your hands on pre-approved auto loans with bad credit if you play your cards right.

Usually, there are extra restrictions that apply when you try to secure a pre-approved auto loan with bad credit. However, plenty of companies out there will still be willing to work with you. Let’s look at how you can qualify for a pre-approved auto loan with bad credit.

After weeks of trying to work out deals with finance companies, General Motors finally got what it’s been wishing for: its reentry into the subprime lending business. In June, the auto manufacturer announced it wanted to sell auto loans to subprime borrowers, but its financing sector owner, Ally Financial Inc., was against getting back into the risky loan business.

Now, GM has agreed to buy subprime auto lender AmeriCredit Corp. and will take charge of car financing. Experts say the company should have no problems reentering this business as long as it stays away from the subprime mortgage loan sector (Market Watch).

Finding auto loans for bad credit may seem easy because a lot of people suffer with less-than-great credit, but in actuality, finding this type of loan is often very challenging. Now that lenders have been tightening up credit requirements after losses from the financial crisis, it’s not easy to get a loan with bad credit. So how can you find a bad credit auto loan lender?

1. Look for Online Lenders

It’s no secret that when you have bad credit, you’re either going to have a hard time getting a used car loan, or it may come with sky-high interest rates. Fortunately, it doesn’t have to be this way. There are car loans that you can take on if you have bad credit (some even guaranteed). Let’s look at a couple of routes you can take to help you avoid paying an arm and a leg for the car you want.

Apply Online

Our ongoing recession and credit crisis are tough for everyone, especially those trying to get their hands on a used car loan. Since so many people have blemishes on their credit reports, lenders used to be more forgiving of one or two items on the report. However, in tougher times, guidelines are stricter, which means it’s more difficult than ever to get a loan. Here are some problems you might run into if you make an attempt nowadays …

• Marginal credit may not be approved. In the past, if your credit was on the borderline of slipping into the subprime category – but you were not there quite yet – you could still be approved for a loan, and possibly with a higher interest rate. However, depending on who you choose to work with now, you may be completely denied for a loan.
• One or two blemishes are too many. Again, in the past you may have been approved for a loan with only a couple of slip-ups on your report, but with lenders cracking down, you may find yourself walking out of a bank or dealership empty-handed with just a few blemishes.
• Bigger down payments to think about. Another symptom of this credit crisis is having to come up with a down payment of 20 – 30% instead of 0 – 10% if you have marginal credit.

Having bad credit can be a Catch-22.

In order to improve your credit score, you need to get more credit to show how responsible you can be, but no one wants to give you anymore credit because of your lackluster history. This can be especially trying for those who need to secure an auto loan quote despite their bad credit history.

In order to avoid overpaying, people with bad credit need to secure an auto loan quote before stepping foot into any dealership. By taking the proactive measure of researching your auto loan quote options before car-shopping, you are making sure you can locate the best auto loan quote regardless of your bad credit.

Committing to a car loan may not seem like a huge task, but it’s actually a major responsibility, which is why you should consider what it entails before taking this big step. To help you more clearly determine what type of auto loan is right for you, let’s look at some pointers to consider before committing to a car loan.

#1: Find Out the Base Interest Rate and APR