Bad Credit Auto Loans
Bad credit isn’t all bad news—at the very least, you are farther ahead than those trying to finance a car with no credit. Since you do not have to build your credit history from scratch, there are many more financing options available to you. Partner with PrimeLoans to discover bad credit auto loans that fit in your monthly budget.
Reasons Why Your Score May Be Bad
Most people with bad credit scores fall into one of two categories. First, there are the people who are climbing up from a no credit situation. If you are building up your credit history, keep doing whatever it is you are doing. Second, there are the people who are tumbling down the credit slope either due to a bad financial decision or misfortune. In this case, you must take a step back and figure out how to reverse the negative factors influencing your score.
No matter why you are seeking auto financing with bad credit, you should be aware of how your score affects your financing offers. Although many financial institutions will be willing to extend a loan to you, the interest rates will likely be quite high.
What Counts As a Bad Credit Score?
Credit scores range from 300 to 850. Scores of 620 and below are usually seen as bad credit scores, even though some lenders will not follow these numbers so strictly. Other lenders will set the bar rather low so that you can get approved for a car with bad credit.
You should be cautious of these loan offers. Just because you’ve been approved for credit and a lender ranked you higher than most institutions doesn’t mean that the credit they are offering is decent. For example, the interest rate might be unreasonably high. When offered such a deal, take a close look at what the interest rates are before deciding whether to sign.
While reputable lenders might try to help you get approved for credit, they will see you as a risk. That is why they are charging you higher interest rates. Take a home mortgage as an example. Some companies might see 620 and below to be bad credit scores. However, they might still approve someone in the 620 to 660 range so long as that person agrees to higher interest rates as a safeguard for the financial institution.
Understanding Your Credit Score
580 – 620
Scores within this range are marginal. It is not too bad of a scenario, but it is not good either. You may still get approved for bad credit auto loans, but your interest rates will be high. You must be in a position to negotiate the rates the lender offers.
500 – 579
Credit scores falling in this range are considered bad. You’ll still find financing options, but their interest rates, fees, and payment schedules will not always be healthy for your budget.
300 – 499
Scores under 500 are universally bad. When you are in this range, it is close to having no credit at all. When your credit score falls short of 500, then you should consider taking on a small credit card from whatever bank you have a checking or savings account in. By using a short credit limit that you know you can pay off, you will slowly climb up the credit score charts. Be patient.
Contact our team to find out more about bad credit auto loans and what you should watch out for. We are proud to serve clients nationwide.