A bad credit report reflects poorly on your financial life. In many cases, it locks you out of many financing opportunities because you have demonstrated an inability to manage your money well. It has however, come to light that this poor history is sometimes not a direct fault of the person. Financiers understand that you might have some capacity to meet monthly payments. Because of this the possibility of successfully bad credit car financing exists.
Repairing Your Credit
Getting cars on finance with bad credit is a good step towards improving your score. It gives you a chance to illustrate your good financial management skills, which will slowly but surely, build your credibility. This financing opportunity extends to those who have declared bankruptcy or those with no credit to begin with. If you can meet the repayments in a timely manner you will be able to salvage your credit score and increase future lending opportunities. It’s imperative that you choose a car that you can afford to forestall any defaults that can burden you with new fees and penalties.
Finding the Right Car
The road to credit repair is a treacherous one, and should not be burdened by poor decisions- such as an expensive car. It’s important to go for the best, least expensive car you can when you are being financed to ensure you maintain a good handle on the repayments. Ideally, the car should be highly reliable, practical and have a great economy, regardless of whether it’s new or used. All your automotive desires should be subordinated first for credit repair as it is more critical.
Should You Secure The Loan?
The biggest disadvantage of bad credit car loans is their interest rates. In a bid to mitigate the risk the financier places in you, a high interest rate is charged. You can opt to choose a longer repayment period to manage the monthly repayments, but this will end up increasing the amount you pay back altogether.
One way to lessen the interest rates charged is to secure the loan. If you have some property that has equity, like your home, you can list it as security. Of course, this introduces a new risk because if you fail to keep up with the repayments, you risk losing the property as well.
An easier, less risky way of getting a better interest rate is to put down a sizeable deposit. 20% is the recommended percentage, but if you can raise more the better. This will reduce the total amount you have to borrow, and effectively reduce your interest rate. The advantage with this is that it can reduce your repayment period, if you so choose.
Compare Car Finance Deals
It is important to shop around to get the best deal. There has been an increase of lenders willing to finance would-be car buyers with bad credit. There is an abundance of comparative tools online that you can use to contrast the different deals available.
Don’t let your bad credit deprive you of the convenience of having your own car. Take a chance on bad credit car finance deals and you might be surprised how well it turns out.