There’s a wise old saying that goes, “Where there’s life, there’s hope.” It’s especially important to keep this in mind when you’re looking for an auto loan after you’ve been given a bad credit rating. You probably need that car to get to work and you’re going to need unsecured car loans for bad credit to make that happen. Finding a lender willing to finance your purchase seems incredibly difficult. But don’t give up hope. With some effort you’ll find the loan you need.
Secured & Unsecured Car Loans For Bad Credit
Let’s face it, the person or organization making auto loans is in that business to make money. That means charging interest on the money lent as well as taking steps to insure that both the principal and interest of your auto loan get paid back. If you’ve got a bad credit score, that probably means that you’ve had trouble paying back borrowed money in the past. As far as the lender is concerned, he is taking a risk in loaning you money. He’d prefer to extend a secured loan, that is, one in which you provide something of value as collateral so that, in case you cannot pay the money back, the lender can recoup his losses by taking possession of the collateral.
If you haven’t got anything to offer as collateral, it’s possible for you to get an auto loan by finding a co-signer. This person guarantees that he or she will pay off the loan if you fail to do so. Chances are that the co-signer is putting up collateral, so this option is also a form of secured loan.
The Unsecured Car Loan Option
What if you have no collateral to offer and are unwilling or unable to find a co-signer? You still have some options for finding a lender, but be aware that the terms of unsecured car loans for bad credit are probably not going to be the best. Without any hope of repossession, the lender has to insure a return on his investment in you through higher interest rates. So if you’re seeking unsecured car loans for bad credit, be prepared to pay a substantially higher rate of interest on any money you’ll be borrowing. You may end up paying more for the loan’s interest and fees than for the car itself if you chose the wrong company to do business with.
Finding the Right Lender
You may have to opt for unsecured car loans for bad credit, but this doesn’t mean that you need to offer yourself up to the predatory lenders and the loan sharks. There are legitimate lending agencies throughout Canada able and willing to help. If your loan request has already been turned down by your bank or credit union, check out the lending organizations online. If you can find a lender who will report your regular payments to the credit reporting companies, this will be to your advantage in the long run; you’ll be able to salvage that bad credit rating in just a few months this way. Legitimate organizations extending unsecured car loans for bad credit should also insist upon some specific information about you: where you reside, how long you’ve lived in Canada, where you work, and how much you earn each year are standard queries, and you may well be asked for proof of your answers. Be sure that all the terms of the loan are put into written form and go over this contract with a fine-tooth comb. Taking pains at the very beginning of the process will go a long way to insuring that your unsecured auto loan will be paid back in a timely way, even with bad credit, and help you avoid a similar situation in the future.