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Bad Credit Car Loans Could Be Your Way Of Financing Your New Car

Apr 2, 2008
All lenders take your credit rating into account and if yours is less than perfect then you will be turned down by lenders when looking for finance. There is a type of loan that you can get approved for. Bad credit car loans are one way of borrowing to buy your car and at the same time allows you to repair your credit rating.

The downside to bad credit loans is that the rates of interest are usually higher. However you can get the best possible rates by allowing a specialist website to shop around on your behalf and gather loan quotes. A specialist will be able to look with the whole of the marketplace that specialise in offering bad credit loans and will be able to find something that suits your personal circumstances.

While the rate of interest for bad credit loans will be based on your credit rating they also depend on whether you are taking an unsecured or secured loan. If you can prove you ability to repay the loan and do not need to borrow a large sum of money then an unsecured loan could be better. An unsecured means that you do not have to put up security against the amount you are borrowing. However the downside to the unsecured is that the rates of interest are higher than the secured bad credit car loans.

The unsecured finance can be an excellent way when borrowing for purchasing a second hand car. It will also allow you to bring your rating back up if you can manage to repay the loan on time over the term you take it out. Secured bad credit loans will come with a lower rate of interest. However you will have to put up something as security against the borrowing. Therefore your home would be at risk.

Secured car loans are one way of borrowing if you have bad credit and want to purchase a top of the range brand new car. The secured loan would allow you to borrow more than with the unsecured and you would be able to spread the cost over a longer period of time. However you would be paying more out for the loan while at the same time keeping the monthly repayments down.

Whichever choice of bad credit car loans you choose to take you have to compare them by looking at the terms and conditions. All quotes the specialist website will give will come with the key facts attached. This means that you can compare the APR of the loan much easier as the quotes should be "like for like". The key facts will tell you how much the loan would cost over the term you have chosen, the total amount repayable and any hidden fees.

Fees which can be added onto loans include an early repayment fee. This is usually found if you take out a loan that has a special lower rate of interest for say 6 or 12 months and then goes onto a standard rate. If you can repay the loan back within this period of time then you could have to pay a one off lump sum in cash.
About the Author
Louis Rix is a Director of NetCars, one of the UK's leading motoring websites. First established in January 2000, its mission is to become the number one site for used car searches. NetCars provide Guaranteed Car Finance.
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