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Having a car loan rejected is a painful experience, which no one wants to have to go through more than once. The problem, often, is that you either have a poor current credit rating – the result of a bad credit history – or no credit rating at all (yes, if you’re sensible enough not to have any outstanding loans or credit card payments, you may have a zero credit rating because there is no evidence that you pay back on time).
If you need a new car, you have very little choice but to try and find a source of car finance that will guarantee you money regardless of your credit history. Though you should be careful – and aware that borrowing money you simply can’t pay back is not going to make your life any better. If you have genuine need for a new vehicle, and a genuine ability to make the payments on a loan despite your credit rating, then the following route is for you. If you don’t, or you haven’t, then you should think very, very hard before walking down this road.
Guaranteed Car FinancingWhen you have a poor or nonexistent credit rating for no good reason (perhaps you have missed a single payment at some point in the past, or like we mentioned above you may have never had any loans or credit cards), a guaranteed car finance package not only ensures the money you need for a new vehicle – it also helps you bud a better credit score, because you are paying regularly on a new loan. Every payment that goes into your new car loan improves your performance on credit rating scales.
There’s an industry term for guaranteed auto financing that you should take note of: it’s called a high risk loan. That is because you are considered, by the system (remember that system is just a computer, it has no human way of understanding why you have a poor credit rating), to be a big risk of default.
Due Your Auto Loan Due DiligenceIf you’re going for a guaranteed car finance package you need to be careful to read the small print. Just because you have a bad credit rating, doesn’t mean that you need to take the first offer that comes your way. Make sure you research interest rates and thoroughly understand the payment terms being offered to you before you accept one package over any others.
Remember, car finance companies want your money. So even people with bad credit are in a market in which they can afford to shop around. If every high risk loan provider offered the same interest rate and payment terms, there would be no competition. And of course there is plenty, with every high risk loan provider trying to get you to come to them instead of their rivals.
So look long and hard at your options, from every angle, before you make your final choice. The vehicle is not going to run away in the meantime.
There is another way to get car finance with poor credit – and that’s to go for a standard car loan with someone else acting as a co signer. If you are in a relationship or have a spouse, this can be an ideal way to bypass your own credit rating. My wife gets all our loans in her name for that very reason – we both make the payments, of course, but the paperwork is all guaranteed by her.
Remember – a credit score is not always accurate. High risk loans needn’t be high risk.
The above article is written and composed be Roxanne P. who is associated with many automobile and finance communities as their freelance and staff writer. She writes articles in her free time which are related to car finance, automobile, finance loan, etc.