What to Expect from Bad Credit Car Loans with Guaranteed Approval
For those who need bad credit car loans guaranteed approval sounds pretty good. Who wouldn’t want to apply for financing and not have to worry about getting turned down? This type of financing is available, but you need to understand the terms of these loans before you sign on the dotted line. Lenders know that people with bad credit can represent a bigger risk, so they often have terms that help reduce their risk. This isn’t always the best move for the borrower.
Dealer vs. Lender
Find out whether the financing is coming from an actual lender or from the dealer. In many cases, bad credit car loans guaranteed approval come from dealers who are eager to sell more cars. This isn’t necessarily a good or bad thing, but it’s important to know. For instance, if the financing is coming from the dealer, they may not be reporting your payments to the credit bureaus. On-time payments will improve your credit score, so it’s better to have a lender reporting these payments. Otherwise, your good credit behavior doesn’t really count.
Higher Interest Rates
Interest rates are based on credit scores, and anyone with a poor credit rating should expect to pay higher interest rates. However, those who are seeking bad credit car loans guaranteed approval may be particularly risky to lenders, since there’s a good chance they’ve been turned down before. Looking for guaranteed approval means that you’re going to have to pay higher interest rates. You might even have to make a hefty down payment to show that you’re serious about repaying the loan.
Be sure to ask about when payments are due. In some cases, guaranteed financing plans require payments every week instead of on a monthly basis. Those who get paid weekly often prefer this type of plan because it can be easier to pay $75 a week rather than $300 a month, but the frequency can mean that you’re more likely to miss a payment. You should also find out how you need to make those payments. Can you do it by check or online, or do you have to stop in at the dealer to make a payment? Some methods of payment are easier to keep up than others, and you should take that into consideration before you take out the loan.
You are also likely to find that bad credit auto loans aren’t available for every type of vehicle. For instance, you probably won’t be able to buy a new car if you have bad credit. You may not even be able to be a fairly recent used car. When the financing comes from a dealer, you’re limited to the cars on that particular lot. Other lenders may also have restrictions on the age of the car, the mileage, or the price of the car. Just remember that while you may not be able to buy your dream car now, you can always get something that will see you through until better times.
Since guaranteed approval loans often have some bad terms attached to them, it’s wise to spend a bit of time shopping around for a better deal. Don’t make assumptions about your credit. Consider applying for loans through more traditional means before you enter an agreement that’s not ideal. You might be pleasantly surprised.
Financing a car with imperfect credit can be a challenge, but it’s possible. Simply set realistic expectations about what you can afford and learn to take the time to compare your options. When you do this, you’re sure to find something that works for you.