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A Car Loan Still Possible For People With Low Credit

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					Most banks have strict policies about whom they will lend their money to
and for what the money will be used. They will not grant you a car loan
for a used car which is older than five years. They charge higher
interest rates on loans for used cars than on loans for new cars. And
very rarely do they grant loans to people who fall under the “subprime”
category.

A person who is considered a subprime borrower is one who has a blemished
credit history. He may not be paying his bills on time or he may
overextend his credit card. A subprime borrower is usually someone who
has a credit score below 620. If your loan application has been rejected
on the grounds that you belong to this credit-unworthy group, does this
mean that you cannot borrow anymore?

You may still get a car loan if you will look for lenders that grant
financing to subprime borrowers. Avoid finance companies that advertise
“1.9% interest**”. Notice the sign (**)? Below the big ads, written in
fine print, the ** means for prime borrowers only or for people with
excellent credit. Clearly you do not belong to this worthy group. People
with bad credit will have less privileges when getting a car loan. The
interest rates are decidedly high. You may opt to search for online
lenders. But there are measures you may take to improve your
circumstances.

The first thing to avoid is to rely completely on the car dealer. He will
always get a certain percentage out of car loan transactions. In fact, it
will be advisable if you are able to secure a car loan before you allow a
car dealer to be within a shouting distance from you. When you look for a
credit grantor, don’t accept the first one you encounter. Compare
interest rates offered by lenders, but don’t accept the average rates
they give. A lender may offer a lower interest rate for a person with a
credit score of 800 and a higher interest rate for someone with a score
of 600. Ask for specific rates. You may also approach credit unions and
banks where you have a current account.

You also have a chance to improve your “category” by checking your credit
report and reforming your credit score. For example, there might be an
error in the information found in your credit report. This error may have
been the one responsible for the black mark on your credit history. You
must immediately have this error corrected by informing the credit bureau
in writing.

Credit scores can change. If you pay your bills on time and if you always
stay within your budget, then your credit score will likely improve. Once
you have a higher number, you may get a lower-rate refinancing for your
car loan.

				
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posted:7/22/2011
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