A bad credit auto loan is an option for those who fail to qualify for financing with traditional lending institutions such as credit unions, financial institutions, and banks due to their below the mark credit scores, previous vehicle repossession, recent bankruptcy, low income, or inability to produce a specified down payment. What will take place is the automobile dealers fund the bad credit auto loans at first. The loan is then sold or assigned to the particular car company.
A bad credit auto loan is relatively easy to acquire unlike the regular auto loans where borrowers need to have strong credit records for eligibility. To apply for a bad credit auto loan, you will need the following:
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For some lenders, they will require proof of your working phone number or residence proof in the form of utility bills or credit card bills, as well.
While the process for obtaining a bad credit auto loan is seen as easy enough, it is a good idea to take the acquiring of a bad credit auto loan very seriously. First, do your homework. Research the lenders that youpropose to approach to make sure that you have all of your bases covered. Plan your purchase and you will fair better off and there will be less chance for a loan default down the road.
The first step that you should take towards acquiring your loan is to know your credit report. The lower your credit rating, the higher the interest you will have to pay. You can request a copy of your credit report from the credit bureaus where they maintain credit records of millions of people like you and give a green signal to the registered lending companies to lend you, depending on what your credit report contains. You can request a copy of your credit record annually from any one of the three national credit bureaus. Read your credit report carefully so there will be no surprises when it is crunch time. Should you have suffered a bankruptcy in the recent past, then it is smart to close all your open accounts by resorting to a debt consolidation loan, to avoid further cracks in your credit record.
After you have read through your credit report, be sure to report any kind of discrepancies that you find to the credit bureau. In case you have defaulted due to a bankruptcy, attach a sheet to the credit report, explaining what circumstances led to this mishap and then send the copy to the credit bureau. If lenders sympathize with your situation and feel that a default, in your case, was just inevitable then they might revisit their decision of lending to you. If you are fortunate, you may get a better product and at better rates, then what you would have otherwise obtained being in a high risk category.
As you study your credit report, it is a good idea to assess your own financial health. Take the time to find out if in fact you can afford another debt "bad credit auto loan" in your books and whether or not you would be able to repay it in a timely fashion. Carefully decide what bad credit auto loan amount that you can afford and check the loan tenor. After determining your affordability, shortlist the products that are within your reach and choose a dealer based on a thoughtful comparative analysis. If you will take the time to do all of this, you will be well on your way to obtaining a bad credit auto loan.
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