Sometimes in life, unfortunate things can happen that keep you from having stellar credit. You may rely on credit cards for a few months to get you through a difficult situation, for example. While a not-so-great credit score may keep you from securing certain types of loans, you have options when it’s time to purchase a car.
There are two main types of bad credit car loans: secured and unsecured. We can accept either to help you buy the vehicle of your dreams. However, it’s crucial for you to understand the difference before you make your decision.
Secured Car Loans
This type of loan can be beneficial for people with bad credit who have collateral to offer. You put up some insurance that guarantees payment to the bank, and in return, the bank can offer lower interest rates. This type of bad credit car loan has about a 95 percent approval rating.
Furthermore, there is often little or no down payment required to get a secured auto loan. Typically, the interest rate is fixed and can be as low as four percent. Be sure to speak to our financial team about this option.
Unsecured Car Loans
This type of loan requires no collateral, which can mean less risk for you. However, the less risk you take, the more the bank makes. As a result, unsecured car loans can be more expensive.
To get an unsecured car loan with bad credit, you may need a large down payment or trade-in value. Furthermore, these loans usually have an interest rate of seven to 10 percent, sometimes even higher. These interest rates can be fixed or flexible, depending on the bank.
Ultimately, it is up to you to decide whether you feel comfortable putting up collateral for your car loan. Talk to our lending team to set up your investment and get in a great car. We can help you no matter your credit score.