When you have a good credit score, the world is your oyster. However, things are quite a bit different when your score is on the lower side. Making significant purchases – like a car – can prove to be a lot more complicated. Fortunately, there are auto loans for people with bad credit, and here, Phelps Chevrolet goes over what these are and how they work.
What is a Bad Credit Auto Loan?
As the name implies, a bad credit auto loan is specifically for people with less-than-stellar credit. These are designed to make it easy for these folks to borrow money to buy cars. Lenders won’t just look at your credit score but also at your income, current debt, and the car you are interested in.
Benefits of a Bad Credit Auto Loan
The clear benefit of an auto loan for bad credit is that you get to buy a car. As long as you make your payments on time, this will help to improve your credit score. You may also be able to refinance your loan to get a better interest rate. Finally, you’re also building equity in the vehicle as you pay down the loan.
Disadvantages of a Bad Credit Auto Loan
Perhaps the biggest downside to this type of loan is that it probably will come with a high interest rate. This will result in higher monthly payments and loan costs, while using a longer loan term to lower payments will result in more fees and interest. We suggest making a higher down payment now to defray these costs.
Get the Auto Loan You Need in Greenville, NC
At Phelps Chevrolet, we believe everyone deserves a car regardless of credit transgressions. If you’re ready to buy, you can get started now. Just fill out our online application to get pre-approved for a loan.
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