Bad credit car loans are given to people that have a bad credit. If you have defaulted in repayments of your credit cards, utility bills, personal or other kinds of loans taken earlier, then you are listed as a bad paymaster by the credit bureaus. This means that all future creditors will be very cautious in providing you loans of any amount. However, the good news is that you can now get auto loans even if you have CC judgments or bankruptcies declared in your credit reports.
Bad credit car loans make it possible for you to get credit to purchase the vehicle you want. But before applying for a loan you have to pass a minor eligibility test to assure your lender that you qualify for such loans. The most important condition is that you should be employed at the time of application. Bad credit loans are not given to individuals who are unemployed. Secondly, you have to produce proof of residence for the past six months. Thirdly, you should be an adult. And finally, you have to make a small down payment to assure the lender that you have some money to purchase the vehicle.
Bad credit car loans are specifically provided to holders of bad credit to give them an opportunity to have a better life once again. A borrower who has bad credit can opt for a new car or a used car according to his need. But the downside is that if you opt for a bad credit new car loan, you will get it at a higher rate of interest, and for a smaller term. The reason is that the lenders feel that it is a bit risky to give loans of higher amounts to individuals with bad credit. If you decide to take a used car it should not be more than 5 years old. The term of repayment is decided according to your repaying capacity and the amount of loan you have taken. However, the loan cannot be taken for more than 5 years.
If you wish to reduce the rate of interest on your bad credit car loans you should try to go for private financing with banks and credit unions. Your personal banker who knows your financial condition well will be more considerate in offering you an auto loan according to your need. Moreover, your lender will reduce the interest rate further if you provide collateral for the loan taken; such loans are considered secured loans.