Bad credit auto loans are actually easier to get than you might think. Some myths and misconceptions surround this type of loan, making it difficult for some people to decide if they should get one. That’s why we created this blog post to help you understand the truth behind bad credit auto loans.
It’s a common misconception that people with bad credit can’t get auto loans. The truth is that plenty of lenders are happy to finance a car for you, even if you have less-than-stellar credit.
However, these lenders are usually more expensive than their peers. And because they target people with poor credit scores, they charge higher interest rates. So, although you can get an auto loan with bad credit, it will likely be more expensive than a loan from a traditional lender.
This is a myth. In fact, many factors determine how much you will be charged for your loan, including your credit score and ability to pay the loan off in a timely manner.
If you have less than perfect credit but can still make timely payments and maintain other aspects of your financial life, you may have access to lower interest rates than someone with an excellent credit score who isn’t as responsible with their money. Also, exploring different lenders is essential as the rates can vary significantly.
Most people believe that a bad credit car dealer will pull your credit score and use it to decide whether or not to approve your loan application. This is not true. When you apply for an auto loan, lenders will run a soft inquiry on your credit report.
A soft inquiry does not affect your credit score in any way. Hence, applying for an auto loan will not adversely affect your credit score. In fact, a bad credit auto loan can serve as a stepping stone to improve your credit rating. Timely payments and responsible handling of your loan can reflect positively on your credit history and raise your score over time.
In most cases, you don’t need a co-signer to get approved for an auto loan with bad credit. Most lenders will be willing to give you a chance as long as you can prove that you make enough money to repay the loan and that your income is stable.
However, in some instances, you may need someone else to guarantee the loan with you. If this is the case for you, ask about this possibility when applying for your auto loan.
Now that we have debunked the most common misconceptions about bad credit auto loans, you should feel a lot more confident about getting a car loan and driving again. So if you think you might qualify for a bad credit auto loan, we encourage you to apply today.
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