Getting car finance for people with bad credit can be a problem. However, while getting car finance with a bad credit history is difficult and expensive, it is not impossible. If a borrower has been refused car finance elsewhere, there are still many companies which specialize in lending payday loans to people with poor credit ratings; however it is important to avoid scams as there are many ‘brokers’ who just want to take people’s money for in return for a minimal service.
Why Adverse Credit Affects Car Finance
Car finance companies want to lend people money – that’s how they make money for themselves. But they also want to be sure that the people they lend to will pay them back. A bad credit history indicates a high risk that a person will not pay them back, meaning the company has to weigh the odds of a default versus the money they will recoup if your repay.
Individuals with low credit scores may find it difficult to find companies that will lend to them because they pose too high a risk to lending companies. People in this situation will usually have to turn to specialist subprime lenders, who are willing to take the risk of a default – potentially even on an unsecured loan – in return for a higher potential reward in the form of higher APRs.
Finding Bad Credit Car Finance Companies
Subprime companies are all over the place. Subprime lending is big business, even since the start of the recession in 2008. Finding a subprime company isn’t difficult – but finding a genuinely good deal can be a lot harder.
Those looking for finance should always be sure they are dealing with a reputable company. While the internet provides an easy platform for scam artists, it also makes it easier to check up companies too. Before dealing with a subprime lender potential borrowers should always check out internet forums where people post reviews of companies they have dealt with.
Alternatively, if performing a search manually, it is important to look beyond the first page of search results. The best bargains aren’t necessarily the top hits. Take some time to do some research.
Subprime Lending Scams
There are many companies posing as lenders which are in fact ‘brokers’ – companies that will charge a flat fee to match a borrower to a lender. While this might seem a useful service, there is often no guarantee that the borrower will be accepted by the lender, while the potential customer will not receive a definite answer one way or the other until they have paid the broker’s fee. When looking for car finance borrowers should never part with their credit or debit card details until they have written acceptance for a loan deal.
Another thing to bear in mind is that many subprime companies can be unscrupulous in passing on personal data. After submitting their details to one borrower a potential customer can find themselves being called persistently by many others offering related products. A temporary SIM card only costs a couple of dollars but by investing in a temporary phone number a borrower can protect themselves against being harassed by cold callers in the futures.
Finding car finance with a low credit score can be difficult, but it is not impossible. Finance will generally cost more and so it is important to shop around; however, in doing so borrowers should also be wary of potential scams and charges that some companies will try to impose. Check out internet forums before dealing with a company and protect personal details as much as possible.