Bad credit car finance is a fact of life for many people. In today’s modern world it is normal practice to need to have a loan to buy the car you want. Some lenders continue to provide finance to those with a bad credit rating, but in today’s tough economic conditions this is often the exception rather than the rule.
Bad credit car finance is designed for those people who have problems such as arrears, non-payment’s and defaults on their record. For these lenders the main criteria when considering an application is to see whether the applicant is able to meet the required repayments. To do this they will assess your income and outgoings to see if you can afford the loan, based on the information that you provide.
There are generally two main types of bad credit car finance, an unsecured and a secured version. A secured loan is where you will provide collateral, such as your car, which will become the property of the lender if you should default on the loan. This is the least risky form of bad credit car finance for the lender as he has something of value to sell if you should be unable to repay the loan for any reason. Due to this security, the rates of interest on such a loan are generally much lower than the rates on an unsecured loan.
The unsecured loan, the second type of bad credit car finance, is a loan where you do not provide any guarantee to the lender. As the lender is taking much more risk on such an arrangement the amounts you can borrow are much lower and the rates of interest much higher.
The best way to evaluate the car finance options available is to research online. Here you can see a number of lenders and compare their interest rates and various terms and conditions they associate with their loans.
Once you have a loan approved it is then possible to shop around for the car you want with the knowledge you have cash available to negotiate with.
Bad credit car finance can be obtained, but it is only worthwhile if you are comfortable that you can repay the loan arrangement entered into.