Certainly, it doesn’t have to be complicated to avail a car loan if you’re having a bad credit rating/standing. Nonetheless, there are alternatives available to assist you to drive away in that brand new or used car you’ve been planning for. There are certain lenders out there who specialise in bad credit car loan and help people with bad credit finance, assisting them to buy a new or used car of their choice. These lenders take the risk of approving loans for people having bad credit as they have dealt with loans like these earlier and have expertise in this field.
Your repayments will definitely get affected with the interest rate that is charged on your loan. You should know the interest rate that is being offered and should compare it with other loans to ensure the offer you get is quite competitive.
Loan terms can range from one year to five years and above. If you opt for a longer loan term, it will lower your monthly payouts but shall increase the interest amount that you end up paying and it will take you more time to fully pay off your debt. On the contrary, a shorter loan term can lower the interest amount you pay on your entire loan and allow you to get out of the debt sooner; however, it shall increase your monthly repayments. Thus, it is prudent to choose a loan term that fits your income and is in accordance with your financial plans.
You need to know what minimum repayments you will have to make and will they be viable on your income.
About Making Extra Repayments
You need to know if it is possible to make extra repayments on your loan. This flexibility can assist you to get out of the debt sooner.
Lenders charge a monthly administration fee or account fee on their car loans that usually range from $5 to $20 per month. Several of them will also charge an establishment fee to create your loan, which can range from $100 to $500 or above.
In some of the loans, if you make any extra repayments of your loan before the actual loan term, a fee shall be charged. So, beforehand you need to check how much you’ll be charged if you wished to pay off your debt before the expiry of the loan term. Surely, you’ll want a loan that doesn’t penalise you for paying off your debts else all these fees can add up and considerably increase the amount you pay over the loan’s term.
The lender may specify that the vehicle must be appropriately insured until the loan is fully repaid – this is because the lender will be using your vehicle as security for your loan.
Pesky Questions About Bad Credit Car Loans
- Is a bad credit car loan the perfect alternative for me?
Precisely, many components influence this, beginning from your credit rating to the cost of the car you’re deciding to buy. You should compare other products prior to signing on and never ignore other options such as using a credit card to pay for a car.
- How to choose an honest and sincere lender?
Interact with people you have contacts with and find out who have applied for a bad credit car loan and which lender did they opt for and whether the procedure was a success. Properly research and also get connected online and see what others are speaking about their experiences with various lenders on the review sites, discussion boards etc. Eventually, ensure reading all the terms and conditions and get the best car loan.
- What types of fees are involved?
Establishment fees and monthly account fees can considerably add to the amount you have to repay. Ensure you know the intricacies of your loan because some loans will even have a fee for early repayments.
- If things go wrong and if I am unable to pay
In the event, you’re unable to settle a problem with your credit provider, take your grievance to your provider’s sovereign dispute resolution scheme. Most likely, this would be the Credit and Investments Ombudsman Ltd or the Financial Ombudsman Service – both schemes can be contacted by calling 1300 780 808.
A bad credit car loan is ideal for those who don’t have a good credit rating/standing but want to purchase a vehicle through a new car loan or used car loan.