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A Car Loan despite Bad Credit
If you are looking for a car loan, but your credit history is bad, do not despair. Even though getting approval for an unsecured car loan or line of credit is out of the question, there are also types of car loans that are not difficult to get approved for. Despite the poor credit. In fact, there are many companies that will grant financing to individuals with the worst credit. People that have gone through bankruptcy, repossession, divorce, or foreclosure can get the car loan they need!
You may be asking yourself, how is it possible to get approval for a car loan with bad credit history that you have. Well, it is not that complicated. You see, a car loan is a secured loan. It has the car itself as collateral. If you default on your payments, your car will be repossessed from you by the lending institution. When this happens, you not only lose your car, but you also loose any money you already paid for financing, as well as any add-ons that you may have invested into your car, like a new stereo, wheels, etc.
The interest rates for bad credit car loans are obviously going to be higher than the interest rates associated with a good credit car loan. However, if you show a positive payment history for your car loan, you can refinance this loan with the same, or another company after one year. In the case of a bad credit car loan, you will undoubtedly receive a favorable rate upon refinancing your loan. The fees associated with refinancing are minimal. Typically, all you will have to pay is a transfer fee and a state fee. The transfer fee ranges between $5 – $10. The state fee can be between $5 and $75. Refinancing your existing car loan is definitely something you want to consider if you can earn you fees back within a few months.
In conclusion, if you manage to make your payments on time, car loans can be a great way to turn your credit history around. However, if you do not make your payments on time, your credit will be adversely affected. If your car becomes repossessed because of non-payment, your credit will be severely hurt. So, if you take advantage of the second chance offered to you by utilizing an auto loan on a new car, make sure you buy a car that is in your budget so that you don�t have to worry about making payments. Be practical. Choose a car you can afford and at the same time improve your credit rating.
Karin Boode is the founder of the Loan Info Center, who strives to provide valuable information regarding any type of loan via the http://www.loan-infocenter.com website.