Bad Credit Car Loans

Regardless of your credit history bad credit car loans are available and are far easier to get than most people with bad credit think. The reality of modern day living is that there is a whole segment of the economy that is living with bad credit. So if auto dealers want to sell cars to people with bad credit then it is up to them to make bad credit car loans available.

Bad Credit Car Loans-Dealers

Many car dealers specialize is selling cars to people with less than perfect credit who require bad credit car loans to complete the car purchase. Usually the cart dealer will not in fact be the source of funding or lender but will act as a go between, between the car buyer with bad credit and a lender who specializes in lending to people with bad credit.

The pay off for the bad credit lender is that they get good return for their money in the form of high interest rates and also they usually charge an upfront documentation fee of $500 to $1000 depending on the price of the car and the amount of the loan.

Bad Credit Auto Loans-Application

When applying for bad credit car loans a person must meet the following conditions.

• The person applying for a bad credit car loan must be at least 18 years old.
• The person must have a full drivers license.
• The applicant must be employed or have proof of income available to service the monthly car loan payments.

Bad Credit Car Loans-Down Payment

Most bad credit lenders will require a substantial down payment somewhere in the region of 20% of the price of the car when considering bad credit car loans. Most of this down payment will go to paying the documentation fee. Unfortunately for the buyer of a car with bad credit the up front fees and financing costs are considerably more than for a person with good credit.

Bad Credit Car Loans-Options

There are some options available to people with bad credit to avoid the high costs of financing  cars with bad credit car loans.

Get a Guarantor or Co Signer with good credit to co sign with you. This should have the effect of lowering the interest charged on bad credit car loans and with it the actual cost of the monthly bad credit car loans payments.

However it is important if you take this option to remember that if you default on the payments then the co signer will be liable for the payments on your bad credit car loans and also the co signers credit will suffer.