Ever since the mortgage crisis of 2007, it seems that financing options of all types were also impacted. Just as home mortgages became more difficult for buyers to secure, buyers also faced obstacles in qualifying for auto loans. About 25 percent of all Americans have poor credit, and this is one of the major reasons they are unable to qualify for auto loans. The bursting of the lending bubble did result in a few positive changes in the finance industry. The new world of financing actually makes it easier for people with bad credit to quality for auto loans. Here are some non-traditional options that people can consider for securing the financing that they need.
1. Indirect Automobile Financing
Indirect automobile financing is a great option for those who have been turned down from other car dealerships. In the past, individuals only required a credit score of 450 to receive an auto loan. Dealerships made it very easy for people to qualify for an auto loan and get the car of their dreams. Now, however, dealerships are very picky in providing auto loans to people. They will not even look at a person’s application if his or her credit score is not at least 600. Indirect auto dealerships work with people who have any credit score. Unlike traditional dealerships, they consider the financial situation of the person to find a car that he or she could afford. The purpose of creating the plan is so that the individual can increase his or her credit score through steadily making payments.
2. Bad Credit Loans
Bad credit auto loans are another option that dealerships now offer for high-risk individuals. The main concern with these types of auto loans is that they may carry a high interest rate. Consumers should also be aware of any high loan origination fees that may be attached.
3. Loans Made Available from Private Parties on the Internet
Those who need to purchase a car may have luck in finding a private party who is willing to finance the purchase. Individuals are increasingly turning to websites that facilitate a private loan process between two people. A person can set up his or her own terms for the loan, and the recipient can have the chance to review these terms before applying for a loan.
4. Car Auctions
If you are looking for an affordable vehicle, you may want to attend car auctions. At car auctions, you should know that you typically buy a car “as is.” This means that you may purchase the car with any pre-existing defects that it has. The benefit is that you may end up purchasing a car for a very low price.
5. Negotiating Through Craigslist
Purchasing a car through Craigslist is also an option that you always have. You may be able to negotiate a low sale price with a seller on this forum. A private seller may also be willing to work out a payment plan with you.
These are some of the new financing options that you have for securing an auto loan. Before you engage in peer-to-peer lending or any of these loan options, make sure that you perform your due diligence and research the reputation of the individual lending the money. This can ensure that you are protected at every stage of the transaction.