Bad credit car loans are one of the most popular types of loans for people with bad credit. However, there are a number of myths about these loans that can cause people to either avoid them altogether or make poor choices when they do take one out. We’ll dispel some of the most common myths about bad credit car loans so that you can make an informed decision about whether or not one is right for you.
- Bad credit car loans are always more expensive than loans for people with good credit
This is simply not true. The interest rate you’ll qualify for on a bad credit auto loans will depend on a number of factors, including your credit score, the amount you’re borrowing, and the length of the loan. In some cases, you may actually be able to get a better interest rate on a bad credit car loan than you would on a loan for people with good credit.
- You can only get a bad credit car loan if you have a co-signer
Again, this is not necessarily true. While having a co-signer can help you qualify for a loan with better terms, it is not always required. In many cases, you can get a bad credit car loan without a co-signer as long as you have a steady income and can prove that you can make the payments.
- Bad credit car loans are only available from subprime lenders
While it’s true that most bad credit car loans are issued by subprime lenders, this is not always the case. Some traditional lenders, such as banks and credit unions, also offer loans for people with bad credit. The terms of these loans may not be as favourable as those offered by subprime lenders, but they can still be a good option for people who need a loan and can’t qualify for one from a traditional lender.
- You have to have a down payment to get a bad credit car loan
This is not always the case. While having a down payment can improve the terms of your loan, it is not always required. In many cases, you can get a bad credit car loan with no money down.
- You can’t get a bad credit car loan if you have a bankruptcy on your credit report
While it’s true that having a bankruptcy on your credit report will make it more difficult to get a loan, it is not impossible. Depending on the type of bankruptcy, bankruptcy can stay on your credit report for up to 10 years. Nowadays, auto lenders are willing to work with people who have a bankruptcy on their credit reports. Some of them even give you the option of including your car payments in your bankruptcy.
Conclusion:
If you’re thinking about taking out a bad credit car loan, don’t let these myths dissuade you. With a little research, you can find a loan that’s right for you and that will help you rebuild your credit.