Despite the recent news reports that borrowers with bad credit risk paying more for their auto loans, there are ways to beat the price squeeze if you have a credit score of 550 or lower. The increased cost of poor credit car finance is being attributed to volatility within the asset-backed bond market, an area which creates capital for car loans to consumers that have so-called “subprime” credit needs.
Why are prices going up?
They are increasing because the asset-backed bond market, which covers auto loans and other forms of consumer lending, is driving up costs due to lower profit margins. As a consequence, lending firms are pressured to compensate for profit loss by granting riskier loans. This means that certain lenders will say yes to consumers with extremely low credit ratings, but charging more in order to mitigate the risk involved in lending to individuals with poor credit-repayment track records.
Beat the squeeze
Despite this trend, there are a number of ways that you can still try and succeed at finding a great rate and a bargain deal for your car financing.
1. Use a cross-platform comparison service to source a variety of auto loans
Using a multi-level comparison service such as the one available at PersonalLoansForbBadCredit.net means that you can compare auto loans for all consumers – not just those with poor or low credit. This means that your application form can be viewed instantly by a wider selection of lenders, with the ability to offer more competitive rates. If you are a motorist with a subprime credit score, we may be able to match you to a lender that has a special rate for you due to other factors, such as recent positive credit reporting, efforts to improve their repayments and having a stable job.
2. Try to create a positive payment history before applying for an auto loan
Your past and recent past payment history contributes between 10 – 15% of your credit score. Be vigilant in repaying your pre-existing debts and keeping up with bills in the months and weeks before you look for a car loan. This will help maximize your chances of being eligible for better interest rates, more favourable terms and a more appealing deal overall.
3.Take your time in deciding between lenders
All of the lenders featured on PersonalLoansForBadCredit.net offer their own loan packages, finance offers and set their own rates. This means that our search and quote comparison service can yield a very broad selection of loans. You should take the time to compare all of the different features in order to select the best deal for your circumstances. Consider the overall lost over the term of the loan, as well as the monthly rate – having a slightly higher monthly rate and a shorter overall term can make the loan much more attractive for potential resale of the vehicle in the future.
Ready to help you lock down a low rate
Our comparison and quote service is free and available 24 hours a day from any internet connected computer. There is no obligation to accept any loan offer that a lender might make to you, leaving you free to make the most appropriate decision to help you drive the savings away in your next car.
Click here to get an instant online auto loan quote from top lenders.