Bad credit car financing is open for people who would want to get a second chance car loan. Even with bad credit, it is still possible to finance a vehicle loan. Having bad credit does not mean that a person is financially incapable of purchasing a personal asset. Most of them had several missed payments or defaults that are still in their credit report despite being financially stable at present.
Bad credit car loans are just perfect for people with bad credit but can repay a car finance. Just like regular loans, there is numerous information that you should be aware of when applying for a car loan.
Your Bad Credit Car Loan Questions Answered
1. What is the salary required for a bad credit car loan?
Your borrowing power determines your limitations on how much you can apply for a car loan. A higher, stable salary can get you a higher amount when applying for a vehicle finance. A lower salary can still qualify you for a bad credit car loan, but for a mid-range or low-priced car model.
Different car loan lenders require different minimum salary amounts to qualify for a bad credit car loan. Typically, the average expenses of a single person with no dependents in Australia are around AUD 34,000. To be able to qualify for a car loan and to sustain a decent living while doing so, one should earn at least $5,000 to be able to qualify and repay a bad credit car loan.
2. How much bad credit car loan can I avail?
Loan amounts start from $2,000 and can go as high as $30,000. Again, the amount you are qualified for depends on several factors. It depends on how high your down payment is, how much your borrowing power is based on your current income and how much risk banks and lenders see you as a client.
3. What is the average interest rate for bad credit car loans?
Interest rates for bad credit car loans range from 5-6%. This varies according to the lender where you intend to apply for a car loan. Getting a car loan specialist will help you pick a lender that has the most value for your money. You may need an expert’s advice in determining which lenders is most cost-efficient, based not only on the interest rates but as well as the other fees that may be included during the application as well as the actual release of the auto loan.
4. What other fees are included in a bad credit car loan?
Some banks and lenders require monthly fees and application fees to process a bad credit car loan. Monthly service fees are usually below $10 a month. Application fees are one-time payments and can start anywhere from $200 up to $470. Some lenders do not require a monthly service fee. Be sure to include this in your computation when comparing bad credit car loan offers. A higher interest rate may not necessarily mean a costlier option when you add application fees and service fees in the equation.
5. How much down payment do I need once my bad credit car loan is approved?
Some lenders offer a no down payment car loan. However, it would be ideal to pay for a down payment, as high as you comfortably can to reduce monthly payments. A higher down payment also comes with lower interest rates. On average, the minimum down payment would be around 10-20% of the total cost of the car. For a $2,000 minimum bad credit car loan, you will need to prepare $1,000-$2,000 as down payment.
6. How long does it take before a car loan is released?
Regular car loans can take as little as a day or two to get approved or results. Bad credit car loans do not work the same way. Lenders will begin processing the application after receiving all the documents required. Intellichoice Finance can assist you in tracking down all the information and documents needed to process your loan as well as updates on the status of the application. It may take longer than the regular auto loan, but results will be available the soonest time possible.
7. What do I do when my loan gets rejected?
Ask your lender or your car loan agent why your loan was rejected. Lenders are honest enough to give you the information that will help you increase your chances in securing a bad credit car loan. Take these bits of advice into consideration and consider improving in these areas before trying to apply for another bad credit car finance.
It would be ideal to wait for at least a few months before re-applying. Several loan inquiries may also appear on your credit file report. This will create a bad impression on you instead of improving our chances of getting a bad credit car loan approved the second time around. Spend these time building your credit score and saving for a car deposit.
Knowing the right answers to your queries about bad credit car loans does not only inform you about second chance loans. It also gives you ideas on how to increase your chances of getting approved as well as in getting the best possible deals for your car finance.