If you live in US or Canada, having a car might be more than just convenience especially if you use it to get to work or for shopping. Finding an auto loan when you have good credit is easy; however, finding bad credit auto loans might be a bit more challenging. Finding an auto loan for bad credit is not impossible but finding one with good interest rate is more difficult especially if you are looking to purchase a used vehicle. In this article we shall discuss the alternatives available to you and what is the best source for finding bad credit car loans with decent interest rate.
While many people feel that having a car is just for continence, it should be added that if the car is used for driving to work then it is not merely for convenience but also a necessity. If you live in a rural area or you work is located in a rural area, you may not have much choice but to drive to work. Thus, the question is how to purchase a car if you suffer from bad credit. There are several options available to you but not all are recommended as we shall see below
If you have been banking with an institution for a long time, then you are considered a long-term client of your bank. In this case your bank may provide you with a loan based on the fact that they are familiar with you and trust you as a loyal client. However, it is rare to secure a loan from the bank as bank has to maneuver around their policy which is not always possible. This is one source available but it is difficult and it could take a while to secure the loan.
Credit unions are another alternative source for you to tap in to for getting auto loans for bad credit. Your success rate with credit unions is better than your local bank. Your interest rate from the unions should also be decent. Therefore, check them online or visit them in person to find out what they can offer you
Car Dealer’s Financing
This is perhaps the easiest place to find financing but the interest rate will be higher than other alternatives. It is in fact ill advised to get your financing from the dealer. The dealer is not the source for the loans; thus they contact other lending sources to arrange a car loan for you and then increase your interest rate by adding a surcharge to the loan. In fact you should always arrange financing before negotiating with the dealer.
Equity in Your Home
If you own a home and have build good amount of equity, then you can apply for a home equity line of credit to finance your car purchase. The advantage with this type of financing is that your interest rate will be very low perhaps the lowest of all other sources. The major concern with this financing is that if for whatever reason you should have problem making those payments you will lose the equity that you have built in your home and may jeopardize your home. Thus, be certain that you are able to make the loan payment plus the cost for the car maintenance and upkeep.
Bad Credit Car lenders
There are some lenders that specialize in finding car loans for bad credit buyers. These lenders will be able to match you with a car loan in a reasonable time frame and their interest rate is very competitive. Search online for bad credit auto loans and you will find various online lenders. Another reason these lenders can offer you better interest rates is that they have lower overhead than other sources and thus they can offer better rates.