If you struggle with a poor credit history or a subpar credit score, you aren't alone.
According to financial experts, anything under a 630 qualifies as a "bad credit score". Yet, recent findings from the Fair Issac Corp., which is responsible for producing FICO scores, reveal that 20% of Americans have credit scores under 600.
As someone who has had difficulties maintaining their credit in the past, you may be hesitant to apply for an auto loan. But, among the millions of people in the United States who share your less-than-perfect credit standing, many reap the rewards of an auto loan for bad credit.
The number of loans that are given to those with poor or little credit history might surprise you. But, even more surprising, perhaps, is the many advantages for people just like you (yes, you!) that come with getting a bad credit car loan.
Read on to find out the surprising benefits of getting an auto loan for bad credit!
The Interesting Benefits of Getting an Auto Loan for Bad Credit
Maybe you've received warnings against taking on further debt with your current credit score. Or, perhaps you fear that someone with your credit wouldn't get approved for a loan, anyway.
But, there are plenty of loan options for buyers with not-so-great credit scores. And, believe it or not, an auto loan for bad credit just might be one of the best decisions you could make.
Still skeptical about getting approved for an auto loan with bad credit?
Here are 7 surprising ways that an auto loan for bad credit can benefit you.
1. You Can Drive a Reliable, Newer Model Car vs. Paying Cash for a Clunker
By taking out an auto loan, you have a lot more options than you would have if you were forced to pay cash for a vehicle. Unless you have a substantial amount of money available for a car, you will probably be able to afford a nicer, newer-model automobile with a loan.
An auto loan allows you to purchase the car of your choice without putting up the cash price up front. Instead, you will make affordable monthly payments while enjoying the benefits of a reliable vehicle that you can be proud of.
2. The Opportunity to Rebuild Your Credit
A car loan for bad credit allows you to rebuild your credit and re-establish your credit-worthiness.
Once you make the first several monthly payments on time, you're likely to see your credit score start inching up. Even if the terms aren't as good as they might be if your credit was flawless, a bad car loan is still worth it because of the opportunity to repair poor credit.
3. A Car Loan Is an Investment
You won't be "throwing money away" on your automobile purchase. You'll be making payments towards an investment.
Investing in a car offers many advantages. Not only do you get the car, but you also have collateral that can be used to access other types of credit. And, you'll be able to sell or trade your vehicle down the road.
4. No Collateral Is Needed
Unlike other types of loans, a car loan typically doesn't require that you put up collateral towards your purchase. For people who may not have the assets to secure the amount of the loan, this allows them to still be able to purchase a vehicle.
That said, bad credit auto lenders may require that you put down a reasonable down payment.
5. You Can Trade-In Your Current Car to Cover All or Part of the Down Payment
If you don't have the cash for a down payment, you may check 365 Credit Solutions and you can trade in your current car to serve as your down payment instead.
This is a popular option for buyers because you can get rid of the car you don't want anymore, and your trade-in's value goes towards the purchase of your new car. It's a win-win.
6. Auto Loans Are Usually for a Relatively Short Term
While an auto loan does allow you to make payments, it usually doesn't extend past 5 years. So, you don't have to worry about the debt hanging over your head for decades to come.
You can learn more about bad credit auto loans online.
7. Improving Your Credit Will Open Doors for More Opportunities
By making the scheduled monthly payments for your auto loan on time, your credit score will improve. And, others will take notice of this, too.
You'll probably start receiving offers for credit cards. And, when you apply for new types of credit, you'll be more likely to be approved.
Want to Improve Your Credit Quickly?
An auto loan for bad credit can be a great way to start rebuilding your credit and accessing greater future opportunities. But, there are other ways to invest in a brighter financial outlook, as well.
Cleaning up your credit is a huge step in the right direction. But, you can also look for ways to cut your current spending habits. And, you might be able to come up with some easy ways to earn some extra cash, too.
If you're able to save or make money along the way, you could use the funds to pay off the debt that's weighing your credit score down. This is a sure way to improve your credit score as quickly as possible and will help with other loan, debt, mortgage or financial issues you might be dealing with.
Get Approved For Auto Loans Even With Bad Credit
But remember that you can still get approved for a car loan even with bad credit! For more information on getting approved for automotive loans, visit the Loan section of the Bootstrap Business Blog right now!
