Avoiding the Stumbling Blocks Inherent in Some Bad Credit Auto Loans
One way you can prevent yourself from being preyed upon by unscrupulous lenders offering bad credit auto loans is to get the advice of a good lawyer well versed in these types of loans. You might be surprised how many of these lenders are actually breaking the law (and getting away with it) with the types of rates and terms their bad credit auto loans provide to borrowers. The reason they get away with it is that some potential bad credit borrowers are very desperate to have cars – and ironically, some of these bad credit borrowers may already own their own cars but opt to take out short-term loans with their wholly-owned vehicles as collateral. They may have extremely personal reasons for doing this but they may not realize how precarious their situation is as borrowers until they start trying to meet payments – that is where the problem starts.
One way unscrupulous lenders offering bad credit auto loans try to take advantage of you is to offer plainly usurious rates and terms. In the US, if you are a bad credit borrower, you might be expected to pay monthly amortization amounts that are really too high simply because as a bad credit borrower you get a shorter payment period – meaning, while a good credit borrower might be granted a maximum of seven years to pay, a bad credit borrower like you could expect to have to pay within four years maximum so your monthly amortization boils down to a higher amount comparatively.
If paying over a shorter period of time than the good credit borrowers does not make you nervous, then you may find a silver lining in such types of bad credit auto loans in that you are able to build a better credit history than you used to have that way. Future lenders will be impressed that from a bad credit rating you have managed to slowly build a reputation for being a good borrower. And that type of reputation will really be helpful over time when you do business with more lenders in the future.