Are you having a hard time applying for a car loan due to bad credit? A second chance finance car loan or bad credit car loan is the option for you. There are many reasons why you ended up with a bad credit. You may have lost a job a few years back, dealt with a bankruptcy or sickness or simply a few missed payments that you honestly forgot to fulfill. Whatever your reasons are for having a bad mark on your credit file, it does not necessarily mean that you cannot afford to pay for car financing.
Just like regular loan applications, a second chance finance will require almost the same requirements as a regular car financing application. The only difference is it looks beyond your credit score and will measure your capabilities to repay a loan, regardless of your credit history. The process may take longer than a regular financing application but is simply a standard operational procedure to measure the risk a finance company is about to provide you with.
Rejected by a Bank or Car Dealership?
Do not despair. A bad credit rating is not a curse. A rejection from a bank or car dealership is not the end of the line. This is the reason why second chance car financing is for. People deserve a second chance after being declined or knocked out with a loan application. The application process need not be stressful and painful for you. However, you might want to ask help from a bad credit car loan specialist.
It would be ideal to talk to a financing specialist a few months or even more from the date of your rejected loan application. During this time, you might want to reduce debts, pay off credit card balances and save for a down payment for your intended car purchase. The most ideal way to improving your chances in securing a loan – either a regular loan or a second chance loan – is to improve your current financial situation.
Even if a bad credit car loan will look beyond your credit score, it does pay attention to your credit history. On time bill payments, regular payments on other personal loans, and good accounts on your credit file are plus points on your application as well as key in getting better rates and better deals for your intended financing application.
How Do Second Chance Financing Works?
Prior to applying, you might want to check if your current financial situation can handle paying for monthly payments plus car maintenance costs. A $20,000 car at 5% interest rate will require you to pay around $400 a month for 60 months or 5 years. Bad credit car loans come with higher interest rates ranging from 10%-20%. Even if you purchase a much lower brand or model, you may have to shell out at least $200 a month to repay a 5-year car loan. If your current finances can handle this, you might want to take that first step in acquiring your very first car.
Sticking to your budget can be quite difficult with so many options available for you. The key here understanding how much your budget can handle. Together with a monthly car payment comes additional cost for gasoline, car maintenance, together with your usual utility bills and personal needs. Be honest with your source of income and financial capacities when dealing with a loan application. The more honest you are, the more workable your loan features and payment terms will be.
Try to avoid no credit check car loans. Some of these schemes can do more damage than good to your dreams of owning your own car in the long run. Although there are non-conforming lenders that offer no check loans, the risk for them are higher, thus higher interest rates to be the burden on your end. Some interest rates can go outrageously high as 30% and will burden your finances in the long run.
Seek help from experienced consultants with special personal loans. Worried about commission fees? These are usually covered by the bank or financial company, so you’ll have one less worry about extra payments that can come together with your purchase. A pre-approval is also a good idea. Consultants with specialists training will guide you through the right path of a successful application.
As for extra payments, some lenders require a one-time payment fee while other requires monthly accounting fee or surcharges. Be sure to be aware of this and include it in your computation when comparing for the most budget-friendly car financing for you. Bad credit loans may also require a certain amount for deposit so you might want to prepare for this as well.
Upon approval, your loan will be secured by the vehicle you have purchased. Despite being a secured loan, it will come with a higher interest rate – higher than regular car loans, due to the risk associated with the bad marks on your credit file.
Working with Intellichoice can help you secure a better interest rate and favorable deals from one of your reputable lenders. We do more than half the work for you. Simply provide us with your target vehicle purchase, financial details, and car loan application documents and we’ll find what’s best for your circumstance.