While it may seem a stretch for those with less-than-stellar credit, you can find some of the best bad credit car loans online if you are willing to put in a little effort.
Tailored to those with lower credit scores and categorized as subprime auto loans, meaning that these loans designed for people who have problems maintaining a repayment schedule – the FICO scores for new or used auto loans like these are anything below a 680 and usually carry with them higher interest rates and stricter guidelines related to the increased risk lenders will take in issuing the financing.
Although some of these car loans were the focal point of the financial crisis that occurred between the years 2006 through 2009; and were all but rendered extinct, they have recently made a comeback because of many banks reporting a favorable increase in repayment of these types of loans from borrowers.
Car Loans and Bad Credit
Many of these banks are now reporting that these bad credit used car auto loans are becoming more and more the norm due to the shaky economy and the need for people to travel to work. Some of those same people are actually working more than one job which would place and even bigger importance on owning a vehicle. People with bad credit in the past have realized how important it truly is to make their auto loan payments on time. As a result, default rates are at an all-time low which has created even more openings for the high risk car loan lenders to get very aggressive again. Both new and used auto loans with low scores are at record high approval rates especially when applying online.
Prices Are Driving Loan Demand
Another reason why banks are now approving these types of car loans is due to the fact that auto prices are also at an all-time high, which many believe to directly relate to the fact that banks are lending more money for automobiles.
Since car prices are higher, lenders feel more confident in reselling it at auction if they end up repossessing the vehicle for nonpayment. This point is further bolstered due to demand for used car prices having greatly increased in the last few years.
Do Your Research
A word of caution though, before you go rushing down to your local dealership to select your new car, make sure you do a bit of research into your own personal financial history just to see how bad things really are.
If your score is anything less than 500 points than you might find it hard to get a used car loan bad credit approval because you may be viewed as too high of a risk to get a loan. You also want to verify that all the claims on your bureau report are accurate.
The company information, date of claim, and amount can all be viewed from your bureau report so in the event that the claim is false, you can report it and get the errors removed. If you were to check your file most likely you are going to find multiple errors that can be easily corrected.