You have seen the movies and heard the stories. When you are dealing with subprime or high-risk auto loan lenders, one missed payment means one less vehicle. But, if you have suffered through a bankruptcy or other credit-marring circumstances recently and you need wheels, these guys could be your friend.
One of the most important things to do after you have ruined your credit, is, believe it or not, to go for more credit and pay it back responsibly. Catch it on the rebound, so to speak. One great way to do this is through a vehicle loan from a subprime or high-risk vehicle lender.
There Is a Good Side…
Since you already know your credit is poor, and since you need wheels, you should approach a high-risk auto loan lender. These folks know all the stories and know how to deal with people in your situation. And, believe it or not, they can even be sympathetic.
One reason a car loan is easier to get than other loans is that the car itself becomes collateral on the loan. If you do not keep your side of the bargain, repo man will just come get the car and sell it to someone else. Of course, such a happening will mar your credit report even further.
… And a Not So Good Side.
You guessed it. High interest rates. Real high interest rates. Interest rates for folks with poor credit histories, especially bankruptcy, can run into the nine to ten percent range. If the credit history is long and extremely troubled, the rates can leak into the upper teens or worse. Of course, this is a lot more than if you had a clean credit record.
Dealing With Subprime or High-Risk Lenders
If you have poor credit and need wheels, you must do some diligent shopping. Using the financing available at a dealer lot is not recommended. You are going to feel trapped, looking at a car you want, and the dealer and his finance manager tapping their toes and offering you a pen and a dotted line. And the interest will be the worst.
You will do much better by looking online. Punch bad credit car loan into your browser and you will be rewarded with a plethora of lenders willing to help you get behind the wheel. And with the variety offered, you will be far more comfortable considering which financier to go with in the comfort of your own space rather than the duress of a dealer lot.
You Are Practically on the Road
Once you have found four of five lenders who look promising in terms of interest rates and repayment terms, make an application to all of them. See who comes up with the better deal. You can apply online and usually get a quote within minutes. Direct auto loan lenders will give you the best rates and terms. Dealers will give you the worst. So, save yourself some money, rebuild your credit scores, and get where you need to go, all at the same time.