07.23.09
Bad Credit Auto Lenders
Lenders who make bad credit auto loans have existed in one form or another for over 50 years. These companies though they charge higher interest rates than prime lenders are the only means available to many people who have to get an auto loan and have bad credit.
Some lenders in addition to charging higher rates will also charge bank fees which will be included in the sales price of the vehicle at the dealership. These fees are legitimate and legal. The fees are there to protect the lender against expenses involved with early defaults on the loans. These types of loans are very high risk and some lenders report loan defaults as high 60% in the first year of the loans. Needless to say many of the vehicles recovered are in less than perfect condition.
There are basically two types of lenders out there:
1) “Lenders who buy the customer”, that is to say they look at the customers history for situational bad credit. They look at whether the credit was caused by an event like sickness, divorce, death in the family etc. or is it something that’s been ongoing. Another words is this a person who just never pays their bills on time or at all.
2) “Lenders who buy the collateral” These type of lenders will give a car loan regardless of persons previous credit history provided the following conditions exist: the customer has a large down payment and will be in a strong equity position, adequate job time and provable income to service the debt. In some instances the lender may require the installation of a gps unit with a start interrupt switch so they can find the vehicle if the customer decides not make payments anymore.
