Tips On Getting Auto Loans For Bad Credit
Want to get an auto loan with a bad credit rating
? Here are a few key tips for doing so.Use Additional Assets and Collateral
The car you are purchasing is not the only thing you can put up for collateral. If you have another vehicle, that is definitely something you can leverage.
A lender basically wants to know that in the case of you defaulting, they have something to offset their loss. By giving them more collateral, you reduce your risk of defaulting in the eyes of the lender.
Explore Your Options
You don not need to just take the deal provided by your dealership. There are many, many other options for financing your vehicle.
Conventional banks are one option. If you do go with a conventional bank, your best bet is the bank where you currently do your banking with.
Another option is specialized bad credit lenders. There are many both online and offline who specialize in doing bad credit lending.
Look in Your Newspaper
Banks have two typical "modes": They are either in a lending mode or a downsizing mode.
If they are in a downsizing mode, that means they have taken losses and are over extended in terms of their credit. Their goal is to cash in on the credit they have given out and reduce their debt.
If they are in a lending or growth mode, that means they have money to spare and need to be lending out that money to increase their growth rate by making money on interest.
Naturally, banks in growth modes are much more likely to give you financing. How do you find banks that are in a growth mode?
Look in your local newspaper! The banks that are advertising their lending services are actively looking to hand out their money. Your chance of getting a bad credit auto loan at such a bank is much higher than if you walked into a random bank who is probably trying to downsize.
Use Your Home Equity Line of Credit
Perhaps the best way to finance a vehicle purchase is to use your home equity.
Instead of paying an exorbitant amount of interest, just use the equity in your house to take out a loan.
The interest rate will be extremely low, you will not have to deal with any hassle from the bank or the dealership and you can pay it back on very favorable terms.
Getting the Loan
Getting the loan is not as hard as you might think. It is all about asking. If you ask enough people, someone will eventually give you the loan. That said; make sure you are not having your credit run until you are near the finish line, as every time your credit is run it negatively affects your credit slightly.
To wrap up, if you want to get bad credit auto financing, go find banks and other lenders who are actively looking to lend to bad credit lenders.
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