Luckily, there are still plenty of options for people with poor credit. Here’s everything you need to know when looking for a bad credit auto loan.
What are Bad Credit Auto Loans?
Bad credit auto loans are car loans intended for people with poor credit. They work mostly the same as standard car loans. Terms range anywhere from 3 to 8 years, with longer-term loans having higher interest rates.
The main difference is bad credit auto loans carry higher interest rates than standard loans. You also must be employed to qualify for this type of loan.
Although having to pay higher interest charges may be frustrating, accepting and paying off a bad credit auto loan is a great way to start building your credit rating back up. If you successfully pay your loan off you should get a much better rate on your next car loan.
Secured vs Unsecured Loans
There are two types of bad credit auto loans: Secured and unsecured.
Secured loans use your vehicle as collateral. This means that if you are unable to repay the loan the lender has the right to repossess your car in order to get their money back. Because this type of loan is less risky for the lender interest rates are generally lower. These types of loans also have a much higher approval rate and usually don’t require a down-payment.
Unsecured loans do not include any collateral for the lender. Because of this interest rates are generally higher (as much as 10%) and approval rates are much lower. Lenders will likely only approve smaller loans given that the risk to them is much higher.
Especially for those with poor credit, a secured bad credit auto loan is likely the better option.
Where Can You Get a Bad Credit Auto Loan?
Bad credit auto loans are offered by banks, credit unions, and finance companies like Auto Loan Services.
The advantage of going through a finance company is they often have access to multiple lenders. This means they can shop around to get you the best rate. Banks and credit unions meanwhile can only offer you their own rate.
Finance companies can also generally get your loan approved quicker than larger institutions.
Auto Loan Services
Auto Loan Services offers bad credit auto loans and has access to a number of different lenders to ensure you always get the best rate possible.
Unlike other lenders, we also have access to our own inventory of vehicles. That means you can get approved for your loan and purchase your car, all in the same place. The best part is you never even have to leave your house.
Within 48 hours of your loan being approved your vehicle will be delivered directly to your door. And if you’re not fully satisfied with your purchase you can simply exchange it for another one within the first 30 days.
If you’d like to learn more about how you can get a bad credit auto loan contact us today.