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Understanding Bad Credit Car Loan Rates

Author: Charles Martin  //  Category: Car Insurance

Depending upon the borrower’s financial health the rates for a bad credit car loan can vary. You will have to pay a higher rate of interest in case the FICO score is lower. This may sound like a simple thing but a lot more goes into determining the rates of a bad credit auto loan.

Credit Report Checking

The lending companies take a number of factors into consideration while offering car loans on bad credit. It is better to have a proper idea of the different components the lending company will look into at the time of offering the auto loan. This is especially true when you have a bad credit status. One of the most important reports to check is the credit report.

For the lender this is an important report to check and examine whether they are taking a risk by lending you the money. They will take a good look at your credit history status as well to determine if you have been regular in making all your payments. In case you have had any vehicle loans in the past then the lender will be more interested in this too.

Debt to Income Ratio

Lenders are able to judge a faithful person who has been paying off the loan on a regular basis. The lender does not feel any risk when a loan is given out to such buyers. If you are interested in a low interest car loan then making timely payments is a must. Remember that the lender is also interested in the ratio between expense and income as well.

Debt to income ratio is the other term used to refer to this ratio. All this checking is done by the lender just to ensure that you have a good loan repayment capacity. The car you are interested in can also help in determining the car loan needed. If the car is to be provided as collateral the car should be able to outlive the term of loan offered. The lender likes to know what he is getting into before he lends you the money.

Looking for dealers specializing in bad credit car loans. Before you visit the dealer find out what credit score you need for a car loan. There are a lot or errors in credit report, so it is important to get a credit report

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