Bad Credit Car Loans in Louisville
For many of us, owning a vehicle is less an option and far more of a necessity. The convenience and freedom granted by vehicle ownership empower us to maximize our schedule and, in turn, make the most of our daily lives. Factor in the limitations of public transportation (especially in non-metropolitan areas) and it’s easy to see why vehicle ownership is such an important influence in so many of our lives.
But where does this need leave those with less-than-stellar credit? Without the assistance of traditional financing from either a bank, credit union or a third-party lender, these customers struggle to find their means of enjoying the convenience and freedom of vehicle ownership. If you count yourselves among this group, rest assured that you’re not alone.
From Orlando to Oregon, Los Angeles to Louisville, countless consumers struggle with the burden of uncertainty resulting from poor credit. But of course, it’s more than simple negligence, right Orlando? Are those of your from Oregon underestimating your ability for auto loan financing? Are those of you in Los Angeles asking the right questions, and exploring all of the alternatives? Before they go assuming the risk of Bad Credit Car Loans, Louisville drivers with challenged credit should make sure that they understand their credit score, eligibility and the reality of options they have available to them. But where to begin?
First Things First
Only about 11.7% of car buyers pay cash when purchasing their vehicle. This leaves 88.3% of Americans in need of financing in order to purchase a vehicle.
Coming into the 4th Quarter of 2017, approximately 75% of American workers claim that they are living paycheck-to-paycheck.
31% of American households have less than $500 set aside, and 19% admit to having no money set aside in the event of an emergency. This exposes half of American households to the risk of being unable to pay monthly expenses.
While these statistics make it even easier to appreciate the diligence of those with excellent credit scores, it also becomes easier to empathize with many who don’t. Considering that a medical emergency, or home or car repair, could jeopardize so many families financial well-being, the stigma of bad credit is diminished.
Understanding Your Credit
For the benefit of the less-informed, your credit score falls within a scale of 300 (deep subprime) to 850 (super prime). Those with a credit score of 781 and above can expect to be approved with lowest possible interest rates (2.6% on average) while those with a score of 500 or below could receive an APR of 5x or more.
Your Credit score is a weighted calculated based on your (i) Payment History (ii) Total Debt (iii) Length of Credit History (iv) Mix of Managed Credit and (v) New Credit / Requests. The first two criteria account for approximately 65% of the overall calculation.
If your credit score falls within the supreme or deep subprime category, introspection is advised. Do you truly need to purchase a vehicle? If not, you may be able to repair your credit score significantly and in a relatively short period of time. With consistent, on-time bill payment, maintenance of low balances, and resistance to opening new lines of credit you might see improvements faster than you’d think. Prudence may be your greatest ally, as a slight delay in your plans to purchase a vehicle could empower you to obtain an easier approval, and reduce your overall cost by thousands of dollars.
Eligibility for Auto Loan Financing
For those with an immediate need, a common mistake made by potential auto loan applicants is to assume a lack of eligibility based on a failed attempt to obtain a mortgage. The difference between a 30-year mortgage on a $250,000 and financing of a $15,000 vehicle over 5-years is significant. Obviously, the former places the lender at a higher risk, so it’s understandable that their criteria for approval of a home loan will be more stringent than with an auto loan.
If unable to obtain financing from your own lending institution, a third-party lender may be able to help you. There are a variety of such lenders worth exploring, although it’s important that you understand the terms of any financing offered.
Regardless of your credit score, all prospective car buyers should take the time to explore and compare the range of financing options available to them.
The Importance of Down Payment
Another reason for prudence comes in the expectation of a down-payment. Your ability to set aside a reasonable down-payment will aid in your ability to secure financing, however, the downpayment shouldn’t compromise your finances in a matter that will make it difficult to make the monthly loan payment.
Traditional wisdom recommends that 20% of the vehicle’ sticker price is the magic number for an ideal downpayment, but may not always be feasible. That said, you may want to discuss GAP insurance with your lender.
In addition to reducing the likelihood of financing, a lesser downpayment will cause you to assume a greater risk of being upside-down on your loan. In the event of an accident, this could leave you owing more on the vehicle than it is worth, meaning that (if totaled) you will receive less from the insurance company than is needed to pay the vehicle off. GAP insurance will help in offsetting the balance and is worth the consideration for anyone unable to present a 20% downpayment.
Speak To Your Dealer
At most dealerships, the financing office is well-versed in trying to help customers secure the financing that they need. Whether or not you’ve secured other financing, they may have additional options worth considering.
And concierge services such as online.cars can help as well. Using a nationwide network of lenders, they are able to explore every option available to you…and are even willing to do the legwork to help you. Considering that they also have coast-to-coast reach in terms of securing vehicles, you just might have more options than you think!