Have you bought a new car recently? There are numerous creditors, bankers and car dealership funding advertisements the past few months. It seems that car loans are one of the new lucrative businesses for people credit challenged people. That’s right; folks may have sub-prime credit scores but are still being offered car loans. Online direct payday loan lenders are not the only service willing to help those in need. In similar format, these car loan lenders are providing this service at much higher rates than typical car loans. Just because you receive an offer to apply for a car loan, it doesn’t mean you have to apply and it surely does not mean you should use the whole limit offered, that is if you actually get approved.
Direct payday loan lenders will not approve all applicants.
Offers do not equate approved money. They are a way to get new customers through the door. When an online payday loans direct lender advertises, they are considered predatory, but when the loan is for a car, it is all good, right? Not really, but the industry standards for lending services are not the same. Creditors can drum up new customers much in the save way a bank could. When you go to a car dealership and they have their own funding service, credit challenged folks are more than welcome.
What makes these types of lenders different that payday loans? The interest will not be as high, the payoff term is calculated in years and the loans are for much more than a direct lender will ever offer. What does that all boil down to? If you are going to take one of these offers up, be prepared to be rejected as well as prepared to pay large interest costs for the length of your loan.
Why are these lenders/creditors willing to work with sub-prime borrowers? Because car loans are secured loans, there is little fear in losing money from a loan gone bad. Once a loan does reach the default position, the car will be repossessed and sold for profit. A direct payday lender does not service collateral loans but still work with sub-prime borrowers who qualify.
Just like with any other money service, you need to be careful before you start applying to all the car loan offers. Remember that once you send in the applications there will be a hard credit inquiry on your credit report. Short-term loan lenders offer no credit check loans therefore any application will not scrape points off your credit score as the others. A loan offer is an offer to apply, not a guaranteed approval so be cautious in applying for too many of them.
If you do get approved and carry through with purchasing a new car don’t think you have to spend the whole approved amount. It is important that you only purchase a vehicle that you can easily afford. Take into account the interest rate applied to your loan. The longer you take the loan out, the more you will pay in interest. Try to keep the terms of your loan around 3 years. The longer your loan is for, the more interest you pay as well as run the risk of other problems entering your budget. The last thing you will want is to make on=time payments for consecutive years and then run into payment problems which forfeits your car back to the lender. There is something said about short-terms. Not only is this lender going to collect less interest but will often have a closed, paid in full account behind you.
No matter what kind of third party money you use, make sure the payoff fits comfortably into your budget. Secured loans are not as risky for lenders as direct payday lender loans are. Be careful what company you work with and look for those who offer rates on the lower end of the interest rate scale.