Getting a Car Loan with a Low Credit Score
Capital Car Loans writes consumer articles pertaining to the auto loan industry focused on helping customers to better understand auto loans and how they work.
Getting a Car Loan with a Low Credit Score [Car Loans]
December 28, 2009, 12:20 pm
A lot of people want to know if they will qualify for a car loan if they have a credit score of around 500. If you have a credit score of around 500 it means that your credit report potentially has some really huge blemishes on it - ranging from past payments to repossessions and bankruptcies. There could be other big factors including the ones mentioned which have managed to anchor down your credit score. However, with a credit score around 500 there is still a chance that you will be approved for a car loan. The key to getting a car loan with such a low score is go about it the right way in order to prove to the lender that you are good on your word.
It's worth knowing that there are two types of car loans. The first is known as a secure car loan in which you will need to put something up as collateral. The second is known as a conventional or non-secure car loan in which you don't have to put something up as collateral but lenders might consider you if you are willing to make a down payment on the vehicle you are interested in purchasing. Some lenders might require that you make as much as a 40% or even a 50% down payment on the vehicle so that they know that you are really serious about paying off the car loan and you have the money to do so. However the minimum you might have to put down is 20% of the price of the vehicle.
There is a big benefit in terms of interest rate and monthly payments if you can save up the money to put a down payment on the vehicle. The reason for this is that if you put a down payment of 20% you own 20% of the vehicle and are just borrowing 80% from the lender in the form of a car loan. This will result in a significantly lower interest rate and low monthly payments.
For people who cannot afford a down payment there is still hope but the chances are slim unless you are able to prove to the lender that you will be good on your word. You can apply at multiple sources and the best places can be found online. The more you apply the higher your chances are of finding a lender that will approve you.
