See the best car loan companies for bad credit
Car loans for bad credit are loans specially designed for you who are going to buy a car and have bad credit. This means that some special conditions apply to this type of loan. Here we will, therefore, take a closer look at some of these. Of course, we will not cover everything that applies to car loans, but only some basic conditions that usually apply. Nor is there anything that says that all lenders lend just like this, why you should always check out the intended lender before applying for a loan. Here, as I said, we look at car loans, but most of the conditions here can be transferred to, for example, caravan loans, motor home loans, boat loans, etc.
To borrow money of any kind, one must have an economy that is sufficiently good in the eyes of the lender. If you do not do this, the credit examination will not pass and then an application will not be approved. For car loans, fairly standard requirements apply which is that the lender must be of legal age, written in Sweden and have a fixed income. How large this income needs to vary partly on how much loan is desired but also on which lender is hired. But the income should be above USD 10,000 a month is standard. If there are payment notes, it may be difficult to borrow any money.
Since the car purchased should be the collateral for the loan, the lenders demand this. For example, the car may not normally be older than 12 years when the entire loan is repaid. Since the maturity of the car loan is often at a maximum of 6-7 years, it can be difficult to borrow money with the longest maturity if the car is older than 5 years. However, you can buy an 8-year-old car and pay for it in 4 years eg. There may be exceptions to this with age on and car. One can be a car that is old but has a high value that will probably not go down with time. A Ferrari or similar could be such a car. Lenders also often make a claim that the car must be fully insured throughout the loan period.
A common requirement is that the car being purchased must be purchased by an authorized car dealer in order for a loan to be approved. However, this rule has a number of exceptions for where it is possible to buy a car from a private person and get a loan for it. This requires that certain measures be taken to ensure that lenders accept the purchased car as collateral.
Car loans usually extend to a maximum of 80% of the purchase price. This means that 20% must be paid in the form of a cash contribution. This amount can be paid by, for example, a replacement car saved money or take another loan. If money is borrowed to pay a cash contribution, a private loan is applied for.
The amount of money that can be borrowed depends greatly on the car that is bought as it is the collateral for the loan. Some have a lower limit of USD 50,000, while other lenders may want to lend money to someone who buys a car for as little as USD 10,000. There is often a maximum loan amount, but this is usually at such a level that we really talk about luxury cars.
The purchased car will stand as collateral for the loan, which will bring with it some things. The positive is that interest rates will be lower as the lender can be more confident in getting their money back if the repayments are handled. If the repayment plan is not followed, the lender may demand that the car be sold to repay the loan to them.
As the car stands as collateral, the loan must also be repaid immediately if the car is sold. Otherwise, there is no longer any security for the loan.