Securing a car loan with less than perfect credit can be difficult. If you’re car shopping with blemished credit, you might have the feeling that you may have to take a loan from any dealer, regardless of the interest rate. If this is you, then don’t despair because you might have more options than you realize that could save you hundreds of dollars over the lifetime of a loan.
So, if you need a car loan and you have poor or blemished credit. Read on to discover your options for securing bad credit loans when you have less than stellar credit.
Understand you can secure a car loan with bad credit
Rebuilding bad credit can take time, but one good way to get needed credit is through a secured personal loan or hard money loan. Secured loans aren’t set especially for auto finance, yet can be a good option for those with bad credit. Secured loans are guaranteed by something valuable such as house or investment portfolio. A lender can take away the security if payments are missed making it important that buyers using a secured loan purchase a car make their payments on time each and every time.
A friend in need is a friend indeed
Borrowers with less than sterling credit may need to utilize a little outside help to secure a loan for a vehicle. With a guarantor loan, a friend or relative of the borrower co-signs the loan agreement. If the borrower misses a payment or is unable to repay the loan, the guarantor assumes responsibility for loan repayment. In order to be able to receive a guarantor loan. The guarantor needs to have a good credit score with collateral such as an investment to secure the loan.
Think outside the box with an alternative lender loan
There is another type of loan that borrowers seeking bad credit loans can utilize to receive needed auto financing. A non-traditional loan offers borrowers loans through other means than a traditional bank. With these types of online alternative lending services, borrowers can discover different options to secure the money they need like:
- Lending tree
- Marketplace or peer to peer lending
These types of lending options connect borrowers with lenders that want to provide them with a loan. These types of borrowing options are growing in popularity due to their lower interest rates and because investors receive higher than average returns. These types of alternative lenders are willing to take a chance on borrowers with average or low credit scores. A borrower would need to create a profile on an alternative lending service site to allow potential lenders to review their profile to make a loan determination.
These are just a few of the options available for securing a car loan with less than perfect credit. These types of loan options require extra diligence making it important to keep up with payments. Be sure to shop around for the best loan options for you, and do your research. With these types of loan options, you’ll sure to be back on the road in no time.
About The Author
Adrian Rubin is a climate change advocate and freelance writer.