A low credit score of an applicant tells a lender that he/she has faced some money management issues in the past and is a financial liability
. This means that it could be difficult to recover money from them over a long time. However, the increase in competition has made lenders more sympathetic towards bad credit borrowers and they have facilitated their needs by introducing bad credit car loan provisions. These loans allow the borrowers to buy the car with the loan and the lender gets a new clientele. However, low credit comes with its cons as the borrower has to agree to the finances at higher rate than that of general loans and sometimes at lower terms.
Experts say that one should never get a bad credit car loan on a new car. The reason here is that a high priced loan coupled with high interest and low term equates to very high monthly installments which usually lead to defaults, upside down situations and more troubles. Getting a used car is a good option as the price of these cars is low and the monthly installments are affordable. The requirements by these lenders are just the same - a stable employment record, sufficient salary and a valid residential address.
The employment record states that the applicant has been working at a single job or in the same field for two years and have a job that can provide for the bad credit car loan. The salary tells the fact that he/she can afford the bad credit car loan along with other spending and doesn't have to take another loan to cover this one up. As for the borrower, the loan is going to be high which is why it is prudent to check the car and ensure that it can at least work good for the term of the loan.