Bad Credit Auto Loans – A Boon or a Bane?
Bad Credit Auto Loans A Boon or a Bane?
Bad Credit Auto Loans A Boon or a Bane?Bad credit auto loans are meant for people who are not able to get an auto loan through traditional means like the ones through banks and other financial institutions. There are many reasons for people not being able to get auto loans such as bad credit history, bankruptcy proceedings, recent repossession of the vehicle and looking for zero down payment among other things.
Bad credit auto loans are initially financed by an automobile dealer and later sold to a finance company. Normally the dealer buys back the customer's vehicle at a price to pay back the existing loan and provide the loan to buy a new vehicle.
There are qualifying criteria for people to avail the bad credit auto loan. Prominent among them are having a minimum fixed guaranteed income and being eligible for obtaining an automobile insurance policy. Many lenders also ask for the residence phone number and the recent utility bill or credit card statement as proof of residence. The loans are normally given only to the residents of US and Canada.
Those who are not qualified for the loan include the ones who do not have a permanent job with fixed income, the military personnel stationed outside US and those people whose vehicle had been repossessed in the recent past.
Though bad credit auto loans are a boon to certain sections of the people, one has to watch out for cheats and fraudsters. The customers have to read their contracts carefully to ensure that there are no hidden costs and they are not being pushed from a bad situation to a worse one.
Major frauds take place in terms of offering a lower value for the buy back and stuffing the customer with a vehicle which is not his best buy. It is important that the customer understands very clearly how the loan system works and get all the details clearly illustrated and understood.