Did you know that one of the top reasons car loan applications get rejected is due to a bad credit history? If your credit history is less than stellar, getting a new car can feel like a struggle, and you might feel stuck in a loop not being able to get to work to earn the money you need to improve your credit score.
We believe that bad credit shouldn’t mean you can’t get a car. That’s why bad credit loans exist. However, those types of loans can feel like you’re rolling the dice when it comes to payments and interest rates.
The good news is that you have a few options if you have bad credit. Using your assets to reduce the interest on your loan can be a great way to save money and get you back on the road.
Keep reading and learn how to get a car loan with bad credit that will have you driving off the lot in your new wheels.
Unsecured Loans vs Bad Credit Car Loans
Bad credit can mean that you have been late on a few payments or have been denied credit of some kind. How you deal with your bad credit is key to getting back on the road.
When you have bad credit, the first thing to do is to check out the specifics of the loan and see that you have the right kind of loan. There are loans that are meant to be used for more expensive items, like a house or car.
These are called unsecured or personal loans. Another loan is a bad credit car loan. These loans are used to pay for a vehicle, as the title states. This can be a way to get a car if you have bad credit.
The biggest difference between the two loans is that bad credit car loans are backed and insured by the dealer. If you fail to pay the loan, they can take the vehicle back.
The Problem With Unsecured Loans
After a divorce, a job loss, or a bankruptcy, your credit can suffer. Late payments, missed payments, and black marks on your credit do more than impact your ability to get a loan.
Bad credit can cause higher interest rates and make it much harder to get a loan at all. Depending on your circumstances, you may be eligible for a bad credit loan.
These can be harder to get and are usually for a shorter term than a bad credit car loan. A bad credit loan usually has a higher interest rate than a bad credit car loan and often has a fixed term.
This makes it harder to ever refinance if you can’t make the payments. If you are living paycheck to paycheck, it can be hard to afford the payments. Don’t let what you have now prevent you from getting behind the wheel.
How You Can Avoid Bad Credit Loans
If you have bad credit, you can use your assets to get a car loan with a better rate. You can’t do this for an unsecured loan, but it can help with a bad credit car loan.
Contact your bad credit lender and tell them about the things you own. You can use items like the car you have now, your home, your retirement accounts, and anything else to reduce your interest rate.
Any surplus you have in your checking or savings accounts can also lower your rate. This helps you avoid a high-interest bad credit loan and gives you a little more money each month to help with the payment on your new car.
By getting a bad credit car loan, you can use your assets to lower the interest rate and make it easier on your wallet. While you can’t do this for an unsecured loan, it can help you get behind the wheel of your dream car.
Secured Loans for Bad Credit Car Loans
Having bad credit doesn’t mean you can’t get a car. There are several ways you can use your assets to get approved for a bad credit car loan.
If you have a car, you can use it as collateral, along with the value of your home and other assets, to get a car loan. A secured bad credit auto loan makes it easier to get a loan, even if you have bad credit.
Benefits of Secured Loans
Using your assets to get a secured bad credit car loan can help you get approved. However, that’s not the only benefit when it comes to securing your loan with your assets.
Lower Interest Rate
One benefit of a bad credit car loan is that it lowers your interest rate. Depending on the loan, your interest rate for a secured loan can be lower than other loans, like a credit card.
The payments on a secured loan also tend to be lower. This helps you afford the payment on your new car.
Safer Than Unsecured Loans
A secured loan is also safer than an unsecured loan because you can use your assets as collateral. If you don’t make the payments, they can take your assets and sell them.
Lower Risk for the Lender
Lenders don’t like risk, and if they see you as a risk, they’re less likely to give you money. Secured loans help reduce their risk because lenders know that if you don’t pay them, they can take back the car and sell it to cover the balance of the loan.
What Kind of Assets Can You Use for a Bad Credit Car Loan?
There are several assets you can use to get a secured car loan. Here are a few of them:
When you have a car, you can use it as collateral. If you don’t keep up with your payments, they can take the car and sell it to cover the balance of your loan.
House or Other Property
If you have a house, you can use it as collateral to get a car loan. You can use the equity in your home as well as the house itself to get a car loan. Other types of property, like businesses and vehicles, can also be used to get a secured car loan.
Bank Accounts and Stocks
If you have a savings account that has money in it and you have stocks, you can use those to get a secured car loan. You can also use your other financial assets, like CDs and bonds, to get a secured car loan.
If you have any jewellery, like a diamond ring, or a valuable watch, it is worth money. You can use that as collateral to get a car loan.
How to Get a Bad Credit Car Loan
When you want to get a bad credit car loan, it is important that you understand the process and the requirements. These loans are used when you want to buy a car. The process is fairly straightforward, as it takes only a few minutes.
You will fill out some paperwork, which will include your income, expenses, and other information that they need. This process takes less than ten minutes with C1 Car Loans. Ensure that you ask about using your assets as dual security to reduce your interest rates and payments.
The dealer will take the information and process the loan. Once the loan has been processed, they will forward it to the bank.
The bank will review the loan and process it. Once it has been approved, the dealer will give you the information that you need to get your car.
You can use these loans to get a car that you need, even if you have bad credit. This can be a way to get back on the road and get the car that you need.
After you’ve been approved for your loan with bad credit, the key is to keep making your payments regularly and on time. This will help to improve your credit score, so next time you need a loan, you’ll be in better standing.
Get the Car You Need With a Bad Credit Car Loan
When you need a car, don’t let your credit keep you from getting it. Apply for a bad credit car loan and use your assets to help reduce your interest rate and monthly payments.
Are you ready to apply and move one step closer to hitting the road? Apply now, and let us set the wheels in motion.