Auto Loans for Borrowers with Bad Credit
It is a difficult task to get a regular loan from banks or credit unions to buy a new or used automobile when you have a poor credit score. Even if a lender does offer you a loan, the interest rates charged may be so high that you may not be able to afford the loan. In these circumstances, auto loans for bad credit prove very helpful.
What are Auto Loans for Bad Credit?
Post recession there are many Americans who still haven’t been able to improve credit scores that were affected by their earlier defaulted or delayed payments. Bad credit auto loans are loans that these people can opt for when they need funds to purchase a new or used car.
Generally, this kind of loan is initially given by the automobile dealer. Later, the loan is transferred to a finance company. At times, the loan may be serviced by a payment processor on behalf of the dealer.
Stipulations and Conditions
The lender offering auto loans for bad credit takes a much higher risk than a traditional lender as the borrower has a poor credit history, previously having failed to fulfill some financial commitments. This is why this kind of lender imposes certain stipulations and conditions to qualify for the bad credit auto loan: