High Risk Auto Financing Basics

by Shirley Anderson

Your High Risk Auto Financing Loan will not span 30 years as illustrated in the above photo.  In fact, you'll get it paid off sooner than with conventional car loans

Is it time for you replace your old car?  How's your credit these days, or are you planning to pay cash for that vehicle?  Okay, that last question was a little joke, although if you can pay cash, I applaud you.

Lots of folks are struggling with their credit rating these days.  There's no shame in it but it's not much fun, either.  The good news is that you can still get wheels, even if your credit score has seen better days.  Read on to learn the High Risk Auto Financing Basics so you can secure the vehicle you need.

What High Risk Auto Financing Is

High Risk Auto Financing is the solution for:

•>   People who do not yet have a credit history, i.e. students

•>  Those with a FICO score under 620

•>   Anyone with poor or bad credit that would be considered high risk by traditional lending institutions

A high risk auto financer will take a chance on you when others won't.  They are, by definition, subprime lenders.  That makes you a subprime borrower.  In plain layman's terms, it means that you'll pay a higher interest rate and have a shorter repayment term.  You may also need to supply a higher down payment.  Don't let it discourage though, because there are some long term advantages:

•>   You'll get the high risk loan that you need and can't get elsewhere

•>   It is a way for you to get the car you need

•>   You can use the loan to repair your credit by making all your payments on time

Getting Your High Risk Car Loan - Tips

The following tips should help you to increase your chances of getting your pre-approval.

•>   When applying for your high risk car loan, lenders want to see that you have been working in a permanent job for at least the past six months.  Before approaching a High Risk Auto Financer, be sure that you can provide proof that you have stable, long-term employment.

•>   Make sure that your monthly income meets or (preferrably) exceeds $1,600 per month.

•>   Be able to provide utility bills, tax bills, whatever you can that will prove that your residency.  It's best if you've had the same address for six months or more.

•>   Have a working phone.

•>   Get your credit card balances down as low as you can.

•>   If you have filed for bankruptcy, wait until all the details have been completed before applying.

Getting pre-approved is better than applying for a bad credit car loan after you have found a vehicle you like.  It saves you going from dealership to dealership, looking for one that will work with a customer who has bad credit.  Besides, you won't know how much you have to spend until you get your pre-approval.  It may also save you money, as you will avoid the possibility of being scammed.

If you decide to apply to an online lender for High Risk Auto Financing, once you have been approved, you will be sent a list of dealers who are happy to work with people who have bad credit.

Well, there you have it, the High Risk Auto Financing Basics.  You are now equipped with enough information to begin your process of getting that much needed vehicle, regardless of your credit score.

If you'd like to read more on this topic, check out this Guide to Auto Financing with Bad Credit.