The good news is unsecured auto loans with bad credit are relatively easy to obtain even in today’s economic climate. The bad news is interest rates are higher on these loans. We will discuss unsecured auto loans, bad credit car loans, and car loan options.
Unsecured Auto Loans
The unsecured auto loan is given to people who do not own a home or other assets that can secure the loan for the lender in case of default. These loans are also called no collateral loans. These loans carry the highest interest rate of any car loan. The lender is taking a huge risk by allowing a loan on the strength of your employment and how long you’ve lived at your present address. The lender will have you verify your income and call your employer for information. If you are completely honest on your application you should have no problems in obtaining a loan.
Bad Credit Car Loans
You may remember that it was once almost impossible to obtain a car loan with bad credit. Now there are companies that specialize in bad credit car loans. These companies are eager for your business if you meet their qualifications.
These lenders prefer granting you a loan that is secured by an asset such as equity in a house. You can
use your equity or other assets as collateral for the loan. This type of loan has the lowest interest rate of bad credit car loans.
The second option is the unsecured auto loan discussed above. The buyer is without collateral and the interest rate is high on this type of loan.
Other Car Loan Options
There are three other car loan options available for people with bad credit. Guaranteed auto loans work with many car dealers and lenders to provide bad credit financing. These companies have such a large network that they can guarantee to find you the perfect loan to fit your situation. The broker collects your information and makes it available to their network. Lenders contact you with their offers.
There are car loans after bankruptcy available. Many lenders who specialize in these loans understand that you still need transportation even after filing for bankruptcy. These loans have a very high interest rate, but that’s the price one has to pay to get a loan.
If you’ve been hesitant about getting an unsecured car loan, don’t be. Hard economic times have made lenders more willing to make these loans because they are lucrative for them. They have built-in safeguards against default and they are competitive for your business. You don’t need to wait any longer.