No Credit Check Auto Loans – A New Approach To Vehicle Financing
Many people with bad credit feel disadvantaged when it comes to auto financing, as they often experience rejection from lenders. There is no need to postpone a new car purchase until better times with no credit check auto loans.
All auto loans are secured loans, as the vehicle that is financed serves as collateral to secure the interest of the lender. So why is there a need for additional assets to be pledged as collateral? Everybody knows that cars quickly depreciate, as new cars loose nearly a quarter of their value once they are titled and driven off the lot. Therefore, should a borrower fail to make monthly payments right from the start, the lender will be stuck with an asset that will only be able to cover 75% of the loan value. In addition, as there is no credit check performed, there is a great deal of uncertainty regarding the payment behavior of a borrower. That is why lenders secure themselves by requiring additional collateral.
Most people think that only their home may serve as collateral. While most lenders consider equity in real estate as safe collateral, they may consider many other assets to secure the transaction, such as land, machinery, equipment, and other vehicle that you may own. As recent turbulence in real estate market caused home values to plummet, lenders are very flexible with collateral options today. It is important to understand, however, that securing your loan with your personal assets besides the car you are purchasing is an additional risk in case of default, as lender may repossess your assets to cover the losses from your default. Therefore, only consider collateral loans if you are sure you would be able to make timely payments on your auto loan.
Besides securing the loan with collateral, lenders also consider your income as a part of underwriting process. They need to make sure that you would be able to honor your obligations on a monthly basis, and therefore require sufficient income of the borrower to cover loan payments. In addition, proof of steady income is an important factor that determines the interest rate on your loan – the better your income situation is, the less you would end up paying in interest charges. Before even considering a no credit check auto loan make sure you have all your employment and income documents in place to include paystubs, tax returns, and a letter from your employer.
Shop Online To Get The Best Rates And Terms
It is always good to shop for the best deal. Internet presents borrowers with a great opportunity to evaluate lender offers from the comfort of their home, often by submitting one application only. It is important to look around until you will find a lender offer that would comfortably fit your budget.
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ABOUT THE AUTHOR
Devora Witts is a certified loan consultant who helps people get approved for Loans for People with Bad Credit and Bad Credit Mortgage Loans. To get aid with your financial situation you can visit her at http://www.badcreditloanservices.com