Traditional financial institutions which offer auto loans have a set criterion in place which borrowers need to match before loans are approved. The most important ones are a good credit history and an income which reflects the borrower’s ability to meet the monthly instalment. Most usually banks will offer secured loans to sound applicants, using the car itself as collateral for the loan.
Loan costs will be influenced by the down payment made and the length of repayment desired. Applicants need to be aware of any associated fees of penalties attached to the loan, particularly in regard to early repayment penalties.
Those who meet the required conditions will be able to secure a traditional auto loan, but many others will be turned down flat. Those with no credit history or bad credit history however are now finding it easier than ever before to still obtain an auto loan, as non traditional on line lenders flood the auto loan market with competition.
Online there is an Auto Loan Finance Lender Network which has lenders prepared to offer auto loans to those with bad credit and no credit, and those previously turned down for loans. There is even no co-signer loans advertised for those with bad or no credit. These deals will be typically more expensive than those available to those with good credit, but they do make owning a vehicle through finance a reality to those with no other options. Naturally some of these lenders fall into the sub prime lender category.
Those with no or bad credit can search online to compare monthly payments and interest rates on auto loans. Usually the loans will be of shorter term than more traditional auto loans, and a substantial down payment of up to 20% may well be required. The interest rates levied will also be higher, but there are deals with no fees attached and no pre payment penalties.
Discounts may be available if you are able to produce a willing co-signer to act as guarantor for your auto loan. Typically these loans will be used to purchase used cars by buyers who can provide proof of their monthly income.
Although these loans will invariably be more expensive than auto loans from more traditional lenders, they can be used to establish or improve a person’s credit history. Also as the loans are short term it means the borrower will not still be paying for a car well past its sell by date, as longer term loans allow for. The lender is protected as the car is the collateral for the loan and those who default on the loan repayments will suffer repossession of their auto, as well as ruining their credit reputation.
Thus those requiring an auto loan but finding difficulties in obtaining one, can readily find immediate financing by using an online financial company. However it still pays to take ones time and shop around for the best deal and not take the first offer extended in relief that something is available to making owning the car a reality.