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Car Loans
Car loans in general can be hard to understand if you have never purchased a car. This article will give you information on the 3 types of car loans including bad credit, no credit and good credit car loans.
Good Credit
Those customers with good credit can expect the easiest time finding financing for car loans. Interest rates are lowest for this group, as well as incentives coming easier. Those with good credit are seen as the lowest risk to lend to, and therefore are given opportunities to save money that other consumers are not given. With good credit, interest rates are as low as 5%, and incentives such as loan forgiveness, early payoff bonuses and shorter loan periods are seen. Most finance companies will have good credit consumers approved within an hour of application during normal business hours. It is important to know that many with good credit buy new cars, and the cost is higher for the vehicle, but the loan period is shorter.
Bad Credit Car Loans
Those customers with bad credit will have the hardest time finding financing for a vehicle. Auto loans are some of the easiest loans to obtain, but for those with bad credit, finding a company willing to extend credit is hard. Pulling a credit history will give the lenders the chance to see how you have previously paid on accounts. This helps them to decide if you are more likely to pay or not, and therefore their decision is based on this report. Checking your credit history from one of the major credit reporting agencies is imperative to deciding if you can be approved or not. Interest rates will be highest for those with bad credit, and auto loans in this category have been found as high as 29%. Even with bad credit, there are options and you are not required to take the first company that approves you. Shop around and look for lower interest car loans, or those that will take a cosigner to get better rates.
No Credit Car Loans
People with no credit are more or less in the same boat as those with bad credit: it is hard to find a company that will lend to you. This is due to the fact that the credit report is pulled as soon as you apply. The lenders for car loans look at this to see if you will be a high or low risk customer. Since there is no credit history to look at, the decision has to be made and assume that you are going to not be able to pay the loan back. Almost all companies require a cosigner for those with no credit history. This is to ensure that payments will be made, and that the loan is secure. Asking someone to cosign means that they will assume this debt if you are unable to pay it. Just because one person says no does not mean all people will, and you can always ask a parent or grandparent to cosign as long as they have good credit.
Tips on How to Rebuild Credit after Bankruptcy
Many consumers today are very conscious about their credit scores. This is because they know that their respective credit ratings directly determine the terms and rates of interest that will be imposed on the financing deals that they might be taking in the future.
These consumers are also well aware of the fact that a bad credit report can significantly reduce their chances of being granted low interest credit programs. They know that having bad credit marks such as tax liens, foreclosure, court judgments and of course bankruptcy can cause lenders to shy away from extending them the financing deals they need.
Let us consider the effect of bankruptcy. A bankruptcy record is usually retained on your credit file for a period of seven to ten years. This means that you will have a very difficult time searching for lenders, willing to provide you credit lines, for a very long time. You will have to wait for a minimum of seven years before your bad credit report will be dropped and before you can receive again offers for low interest credit accounts.
Still, this does not mean that you have to wait that long before you start repairing your credit history. It is possible to gradually rebuild your credit reputation even after your debts have been discharged under bankruptcy. But how can you do this? You will find the answer to this question in the succeeding paragraphs of this article.
Three Tips on Rebuilding Credit History After Bankruptcy
Even if you cannot eliminate bankruptcy from your credit records, you can do things that will help improve your credit score. Below, we have listed three tips that you can employ to do so.
1. Regularly check your credit report. Always obtain a copy of your credit file from the three credit reporting agencies -Experian, Equifax and TransUnion. You can do this by ordering your free annual credit report from Annualcreditreport.com.
Once you have received your credit report, you must carefully check the entries reflected on it. Scrutinize your personal information, as well as your existing credit accounts. In case you find an error or misprint, immediately file a dispute letter with any of the three credit reporting firms. This way, you can prompt them to investigate your credit records and verify your claim. Should they find your claim valid, they will issue you an updated and more reliable credit file.
2. Seek professional assistance. There are many non-profit organizations that provide free credit repair services. By enrolling in these programs you can certainly learn effective tips that you can use to gradually regain your credit reputation. Not only that. Credit repair guides also provide advice on how you can manage your finances as well as your credit accounts responsibly. This way, they can assist you to avoid falling into new debt traps and encountering bigger financial problems in the future.
3. Make a conscious effort to avoid debts. The two tips we have listed above will not work unless you resolve to change your spending habits. So, we encourage you to avoid incurring new debts. Apply the money-management tips that you have learned from your free credit repair sessions. This way, you can succeed in regaining your credit worthiness and in recovering your financial health.
Follow these three tips and for sure you can successfully rebuild credit even after you have filed for bankruptcy.