Bad Credit Car Loans
If you want to buy a car on credit, but have a bad credit history, you will find that many mainstream avenues for obtaining loans are closed to you. This does not mean that you should give up and resign yourself to not being able to secure loans - no, there are other perhaps less obvious routes down which you can choose to go to secure loans. One such route is bad credit car loans.
How Bad Credit Car Loans Work
Bad credit car loans are designed to offer credit to borrowers who have a poor credit history. This may include borrowers who have County Court Judgements (CCJs) recorded on their credit file, payment defaults on existing loans, mortgage arrears, bankruptcy orders or Individual Voluntary Arrangement (IVAs) in place to pay back bad debts.
Each lender of bad credit car loans is different, so the criteria on which your car loans application will be judged is likely to be different also. This means that whilst one loans company may refuse your application for a bad credit loan, others may accept your application.
In general all of these loans companies specialising in bad credit loans give weight to a different set of factors in judging loans applications when compared to mainstream loans companies. For instance, some lenders will approve your application on the strength of recent credit history over the past 12 months or so, which is great news if your bad credit history was caused by mortgage arrears or CCJs further back in time. If you are a homeowner then even a bad credit history in recent times may be overlooked by the loans company in favour of securing the car loan against equity in your home.
How Much do Bad Credit Car Loans Cost?
Bad credit loans available for purchasing a car will cost more than a mainstream loan used for the same purpose. Typically, borrowers will find an increase of between 1% to 3% on their car loans when compared to loans available to mainstream borrowers. This will therefore push the price of your car purchase upwards.
The increased cost of your bad credit loan however can be countered through negotiation with the car seller. This applies to both private car sellers and traders of used and new vehicles. It is possible to knock down the advertised price of a car by several hundred if not a couple of thousand pounds or more, providing the right negotiation techniques are used!