In the United States, the debt for auto loans has capped in excess of $987 billion according to Experian Automotive reports made about the industry late 2015. This amount is the highest outstanding balance for auto loan debt since the first public report issued in 2006. Between the year 2014 and 2015, there have been 11.5% of consumers that have taken out car loans. Some of those loans were subprime, which means that the consumers had bad credit. In the latter part of 2014, these subprime car loans capped more than 20% in open balances and this number increased in 2015. These numbers may mean that there are more people with poor credit needing vehicles.
Consumers with subprime loans have low credit scores and for that reason car loan applications and approvals have risen. However, in the same manner, auto loan companies have reported a decline in thirty day delinquencies among consumers. This could be due to one or two reasons. The auto lenders may be selecting consumers with bad credit, but at the same time, consumers who want to build their credit so do their best to pay on time. On the other hand, it could mean that consumers who have poor credit want to take responsible action to improve their finances. In any case, the auto debt report indicates that it is possible to be approved for auto title loans or car loans even when you have bad credit.
Most lenders realize that bad credit doesn’t mean that the person is bad. It may be that the person met on some bad times and was forced to consider credit as their last option. For that reason, they may have taken care of other pressing matter and allowed credit to go bad. Purchasing a vehicle is not something that many consumers relish. Of course, fast cars and shiny wheels get the adrenalin rushing and sometimes, the consumer will want to buy a car that is way above their financial means. If you are a consumer with bad credit, it is best to prepare yourself for the shopping experience.
There are specific things to consider such as:
- Shopping around
- Conducting research
- Check your credit rating so you can fix any errors
Not all auto lenders treat credit ratings the same. Therefore, it is best to learn more about each lender you are interested in – before you make a decision to purchase a vehicle. Although, you may have bad credit, it doesn’t mean that you have to settle for a double digit interest rate. Some lenders are more lenient towards the consumer with bad credit, not capitalizing on their situation, but trying to help them to build back their credit. That is the kind of lender you should try to find. Don’t just look for the lenders that tout loans for consumers with bad credit. There are lenders that offer better deals.
The Bottom Line
If you want to improve your credit rating from bad to good, then an auto loan or auto title loan is your ideal option to get you out of that rough patch financially. You don’t have to allow your bad credit to be the deciding factor when you get ready to purchase a vehicle or obtain a title loan.