Bad credit auto loans can be tough to find, especially in economies where lenders don’t have a lot of money to gamble on high risk car loans. If you need to get an auto loan but have a bad fico score, you might wonder whether or not a loan broker will be useful to help you find the best loan you can. The answer is a definite “maybe,” but it really depends on the circumstances. The following guide may help you determine whether or not a loan broker is right for your situation.
It’s true that bad credit loans can be difficult to find, but this does not by any means mean that they cannot be found without the aid of a loan broker. If you can’t get a loan through your bank or a local credit union, go to the car dealership from which you purchased or are planning to purchase your car. They’re on your side when it comes to finding a loan, because they want you to either continue making payments on the car you already own or else buy a new car from them. In this case, the dealership can act as a “free” broker for you. You can even try looking on the Internet for reputable lenders based online.
While there certainly are ethical car loan brokers, you can generally assume that a broker you work with does have a personal agenda. Brokers may have agreements with certain loan companies so that they will get a percentage of the interest you pay on the loan in exchange for having referred you to that lender. As such, a broker can usually always find you a loan, but you should do your own research to make sure that the terms of the loan are as ideal as possible under the circumstances. The same applies to car dealerships, but the advantage to dealerships is that you won’t be paying for their brokerage services.
As bad credit makes you a high risk prospect for any lender, you can expect to pay an extremely high interest rate, which is significant on expensive purchases like a car. Should you find yourself in the position of having to take a bad credit loan, you should keep two things in mind: finance as little as possible, and pay it back as fast as possible, even if it means sacrificing in other non-credit related areas. Monthly payments are not the only thing you should look at when taking a loan. Paying off high interest loans faster than originally planned will help your credit to improve and cost you less money overall.
Loan brokers can truly be helpful when you are unable to find a loan even with assistance from other sources. However, it’s a good idea to do your own research first to save money if possible.