5 Reasons A Bad Credit Car Loan Might Be Your Best Option
If you happen to find yourself in a tough financial situation – whether it’s because of previous or current debts owed or bad investments, a job loss or particularly bad credit – the prospect of taking on an extra financial burden can seem pretty daunting. Spending a lot of money, or taking out a large loan, might seem like too heavy of an expense to take on, or too heavy of a financial burden to carry – and rightly so, especially if you are in your situation because of borrowing troubles in the past.
Fortunately, there is still a relatively safe, manageable kind of loan you can take out to not only improve your immediate quality of life but also to help jumpstart your financial situation toward positive growth. These, of course, are bad credit car loans, which are typically available even to bad credit borrowers and can seriously help get your finances back on track for good.
If you’re still not sure about how you can use a bad credit auto loan to help revive your credit score, here are a few reasons why a bad credit car loan might just be the perfect kind of investment for you.
Easy to Secure
Compared to other kinds of loan agreements, bad credit car loans are relatively easy to secure – especially for bad credit borrowers. These loans are really directed toward those with credit too bad for other lenders, and exchanges the borrower’s trust with a higher interest rate. This means that bad credit car lenders stand to make slightly more off the deal than standard lenders, and so they are more willing to work with those with less than stellar financial situations.
A quick and easy approval can also help mitigate further damage to your credit score, as rejections can be reflected on your score and too many could be a red flag to future lenders. By doing your loan shopping within about a two week period and limiting the number of lenders requesting credit checks, you make sure that your credit score will not reflect multiple rejections from other lenders. An easy approval means only one request, and less of a chance of facing numerous rejections.
Besides, many times these loans are set by the used car dealers themselves, meaning you can simplify your car buying and financing experience into one easy stop. Plus, by having an idea of what you’re looking to pay and how much you can handle per month, the smart dealer can direct you toward a car that’s perfectly suited to both your tastes and your price range – helping you avoid getting into a deal you really can’t handle, and ensuring you get the best of what you want out of your bad credit car loan.
Can Help Your Bad Credit
Taking on a loan and paying it back responsibly is the absolute best way you can rebuild your credit, and this goes or those with bad credit as well. By taking out a bad credit car loan, you allow yourself to prove to the lender and all future lender that no matter what may have happened with your finances in the past, you can now be trusted as a responsible borrower who will make payments in full and on time.
In this way, taking out a bad credit car loan could actually be the life preserver that saves your credit score from the depths. Being easy to secure, they offer a fairly democratic way to rebuild your financial portfolio in a positive and attainable way.
Usually Relatively Affordable
Bad credit auto lenders recognize that their customers are not in the best financial situation and so most of these loans are directed at those who cannot afford heavy monthly bills or egregious down payments. These loans are typically adjusted to fit your budget on the understanding that you’ll be paying a higher interest rate, and thus a higher amount over a longer amount of time. By keeping your monthly expenses low, however, you give yourself a better chance of being able to better juggle your month-to-month finances and get yourself back on solid financial footing.
This is especially important for those trying to rebuild credit, as making monthly payments on time is critical to the credit building process. In this regard, it may actually be worthwhile to pay the higher interest rates now if it brings the ability to secure better interest rates down the road. Once your credit is built back up a little, you can likely refinance your loan for lower rates or lower monthly payments to further increase affordability.
Comes With Capital (A Car)
Perhaps one of the greatest benefits to taking out a bad credit car loan is that, unlike other financial investments, this loan comes with very tangible capital: the car itself. More than just a bargaining chip, a car is a highly useful tool that can help you find a job, get to work, and live your life.
By taking out a bad credit car loan you not only make an investment in your financial future, but in your personal potential as a functional member of society as well. Having this kind of annuity under your ownership only further proves to investors that you can invest intelligently and will definitely help your credit standing.
Not A Super Long-Term Investment
Perhaps most attractive to bad credit borrowers is that taking out a bad credit car loan is not a very long-term investment. At most, you’ll probably find a five- or seven-year loan to be the average length, with the cost of the car and interest spread either fairly evenly throughout or set up as a balloon payment for later in the loan term.
Because you’re not investing for decades, you likely will not feel as though you’re trapped under the loan for the rest of your financial career. Besides, it’s always a positive step to set an attainable goal for yourself financially, and setting yourself up to be in a better situation in five years or so is definitely a reachable sight to set.
It’s not too hard to imagine how someone finds themselves in a bad credit situation. Whether from late bill payments, a foreclosure or bankruptcy, a stolen identity, or even from defaulting on a previous loan, your bad credit can follow you for a long time – but that doesn’t mean it has to rule your lie, and determine what you can and can’t have for your happiness and comfort.
By taking a few simple steps, like taking out a manageable bad credit car loan, you too can begin the healing process for your bad credit. With a bad credit car loan, you give yourself an easy way to prove your fiscal responsibility, and you get a car out of the deal. As far as smart financial moves go, it could definitely be a lot worse.
If you, like millions of Americans, are facing bad credit and are tired of hearing rejection after rejection from lenders, consider a bad credit car loan from a car dealer or lender near you. It could be just the thing to save your credit – and get you back on the road to financial freedom with confidence.