Bad Credit Questions and Answers
Question submitted by John A
I would like to apply for a loan to buy a new vehicle but all the banks turned me down, because I have bad credit. Is it possible to obtain automobile financing from somewhere else? Keep in mind I don't want to pay ridiculously high interest rates, is this possible to obtain a low interest loan, even with my bad credit score? What are my alternatives?
Hi John, good question. I do not know what your financial background is. However from experience I can tell you banks usually turns a loan application down because you have bad credit or no credit. If your credit score is spiraling out of control due to financial difficulty, or if you are a possible first time buyer with no credit rating, it is always going to be difficult to get a loan approved.
In your question you mentioned you wanted to buy a new vehicle. Even though some of the banks you applied at declined your loan application, you might be surprised to find out there are still a few other options for you to consider, when it comes to automobile financing.
I'll give you a few safe and affordable tips to get a loan even with a bad credit rating, while at the same time avoiding those high interest rates that you mentioned.
Ok so let's face it you already tried to apply for a loan and got your application rejected so yes, having a bad credit rating is a bit of a stumbling block, when it comes to securing automobile financing.
The banks probably denied your application for auto credit because you do not fit the lending criteria they use when deciding to approve an application for an auto credit loan.
Here are you alternative options:
BAD CREDIT OPTION 1: P2P Lending
Consider P2P lending - (NO not the file sharing service!) P2P lending stands for peer to peer lending as you might have guessed. It's an online loan platform which allows you to borrow money from an individual person rather than a bank or credit union. It is still a rather new concept and has only been around since 2006 but it is growing in popularity.
You can either register as a lender or a borrower. When registering as a borrower you fill out some basic info, like how much you would like to borrow, the interest rate you are willing to settle for and the reason why you want the loan (in your case you would type, "I'm looking for automobile financing to buy a new car).
Lenders will review the active applications on the site, and get in contact with you, if they are willing to grant you the loan. Automobile financing is especially common on the P2P lending platform and you should not have too much trouble finding a lender.
You set your own terms.
It takes some time before an auto credit lender makes contact with you.
It is not always easy finding a lender that will agree to give you a low interest auto credit loan.
Approval takes a long time.
You have to submit a small mountain of paper work before your loan gets approved.
BAD CREDIT OPTION 2: Ask Family or Friends for Help
If the banks declined your loan application, and you can't find automobile financing on a P2P lending platform surely your family and friends might help you? However this is a bit of a tricky one as it is never nice to swallow your pride and ask your friends for help. It is important that you treat loans granted from family or friends just as you would treat loans obtained from a bank or credit union. It is always a smart move to draw up some written agreement before accepting the money.
You likely won't pay any interest.
There is some flexibility when it comes to agreeing on the terms of the loan.
You have to swallow your pride.
Lending money from family or friends has often led to disastrous consequences in the past – especially when you can't pay back the loans.
BAD CREDIT OPTION 3: Auto Credit Financial
This is not an advertisement for Auto Credit Financial but rather a story of personal experience.
Like John, I was also in need of automobile financing to get me a new car. I was young at the time and did not really have any credit rating, so all banks turned me down. The P2P lending platform seemed too complicated for me, and asking family or friends for money just wasn't an option.
There are tens of thousands of auto credit dealerships out there who claim they "have the best deal for you", but when it comes to actually getting the loan you start to find out about all the extra charges and high interest rates that you have to pay.
Not the case with Auto Credit Financial! I went to their website and made use of the online loan calculator, which calculated my monthly premiums. It was low so I was a bit skeptical, I then chose to speak with one of the online auto credit advisors, they were very helpful and explained EVERYTHING to me.
Turns out the quote from the online loan calculator was indeed correct!
I applied and got a no obligation pre approved loan. This means that nothing had to be finalized until I purchased my shiny new Ford Fiesta and signed the contract. Auto Credit Financial then went ahead, as promised, and gave me the automobile financing I needed.
I'm just about to pay off my last premium and Auto Credit Financial even helped me build up my credit score!
To get back to John's question, "How can I get automobile financing with bad credit?" The above mentioned are some of your best options, when it comes to securing a loan with bad credit. My advice, to you John, would certainly be to go with OPTION 3 – and make use of Auto Credit Financial as I did. It's going save you a lot of money in the long run. Good luck with your auto credit application!