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Why Dealerships Give Auto Loans to Bad Credit Borrowers

It is a known fact that credit score is an important factor which decides whether a loan applicant would get approved and what interest rate would be charged of him/her. However, many people wonder as to why a dealership or lender would agree to provide auto loans to a bad credit borrower in the first place. There are several reasons behind their provision.

Many dealerships take it as an opportunity to charge a high interest rate from these borrowers. They don’t have any concern regarding whether the borrower would be able to pay back the finances or not and charge very high interest. The applicant usually agrees to it because he/she thinks that other lenders or dealerships might not approve the auto loan due to the low score.

There are several genuine lenders who charge a little high interest of these bad credit borrowers. However, they do this to ensure that their money is made as soon as possible because defaulting of the borrower would mean a waste of their finances. These lending institutes provide the bad credit applicants with a chance to improve their credit score which might have had hampered due to some misfortunate incident. Therefore, there are several reasons why auto loans are given to bad credit applicants which is why an applicant shouldn’t fear in submitting his/her application to multiple lending institutions.

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