Bad Credit Auto Finance

No matter how much we might like to, few of us have the means to purchase a new car without financing at least a portion of it.  Sure, you can save money and buy a quality used car, but sometimes a brand new vehicle is all that will satisfy our needs and, of course, our wants.  For people who have to seek financing for their new vehicle, there are many options available. 

Unless, that is, you have bad credit, no credit, or even credit that isn’t quite as good as we might hope.  For those who have made mistakes in their past, getting a car loan isn’t so easy.  People with credit problems often have to seek out more creative ways to finance a new vehicle.  Thankfully, there are options available to those prospective buyers with less than stellar credit ratings.  These options are best found, perhaps, on the Internet.  The Internet allows people with bad credit to be able to finance their automobile purchase, although often at a much higher rate of interest than a typical “A rated” buyer. 

What Bad Credit Means In The Auto Finance World

There are two ways to underwrite a loan.  This goes both for houses and cars.  The first, most common, method of lending is through the FICO score.  The FICO score is based upon a number of factors, including but not limited to the amount of debt you already have, and your history of payment on that existing debt.  The “Fair Isaac Corporation” determines your FICO score upon an admittedly top-secret set of standards. 

Most lenders use this score because it’s a quick and easy way of determining your creditworthiness, or so they think.  Many buyers won’t qualify for a FICO loan, no matter how creditworthy they are.  Many people who have no debt at all don’t even have a FICO score!

For those wishing to purchase a car using their FICO score, and are unable to, there is also “manual underwriting.”  A manually underwritten loan looks at more than just your FICO score.  It looks at your total credit picture.  How much you owe, versus how much you make.  It looks at your payment history on your existing loans.  This is the method of choice for very few lenders, because it actually requires a real person to look at your application.  FICO decisions are typically done by a computer. 

Of course, it’s also distinctly possible that many people won’t qualify for a manually underwritten loan, either.  Some people’s credit is just too damaged.  Some people just have too little for the financier to go on. 

What Is A Bad Credit Finance Company?

For those people, there is the bad credit auto finance company.  These companies are generally able to underwrite loans for a person with little or no positive credit history.  The reason for this is that they charge more interest on their payments.  By charging more in interest payments, they hope to make a great deal of their money back in case a customer defaults on the car payments.  Then, they have the ability to repossess the car and sell it for the difference.  There are certainly a number of reasons to stay away from companies that offer bad credit auto finance, if you have a good credit history, not the least of which is that their rates are often upwards of twenty-four percent. 

Of course, these companies provide a service, and a valuable one at that.  Without them, many people would not be able to get bad credit auto loan finance and wouldn’t be able to make it to work on time.  Without a reliable means of transportation, it would be difficult to get the kids to school, pick up groceries, and even visit with friends.  This is why those with low FICO scores or no credit at all look to certain companies for bad credit auto loan finance. 

Finding A Bad Credit Auto Loan

Those with bad credit don’t have to settle for buying from a buy here pay here dealer.  They can still find bad credit auto finance from a reputable dealer; it just might take a bit longer.  The best place to find bad credit auto loan finance is through the Internet.  There are many websites including www.badcreditcapital.com, www.autonetfinancial.com, and www.autoloanaccess.com. 

These free sites provide customers who have poor credit with the opportunity to find lenders and dealerships that will work with them to find a loan to finance their new vehicle.  Many of these sites provide easy applications that can be approved in a matter of minutes.  These auto finance bad credit loans can be used for new or previously owned vehicles.  While you many not like turning to one of these companies for your bad credit auto loan finance needs, you may find that you have no alternatives.

What To Look For

There are just as many scam sites for bad credit auto loan finance as there are reputable sites, so before you sign on the line, check out the companies that want to underwrite your loan.  How long have they been in business?  What sort of reviews do they get when you do an Internet search for them?  When searching for a bad credit auto finance company, there are a few things you should look for before making a final decision.  The most important of these is whether or not the company is reputable.  There are many companies out there that claim to provide loans for those with bad credit; however, these loans come with strings attached that make them undesirable for most.  Consider checking with the Better Business Bureau and check online for customer reviews.  This could end up saving you time and money in the long run.  Bottom line; don’t just take their word for it.  Don’t forget, they need you as a customer just as much as you need them to finance your car!