Auto loans for bad credit and low interest rates

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Interest rates are low and are expected to stay that way for some time. Many bad credit borrowers fear that they can only qualify for high interest rates, but now may be the time to start shopping around for rates while getting it right.

Why are interest rates low?

Due to the COVID-19 pandemic, the Federal Reserve’s Federal Open Market Committee (FOMC) voted to keep interest rates between 0% and 0.25% until 2022. What is that means ?

It means that interest rates offered for everyone are lowered, since the prime rate has fallen. The FOMC lowers interest rates to encourage businesses and consumers to spend more money.

For borrowers whose credit is not perfect, a low prime rate may mean being entitled to a lower interest rate than before the pandemic. According to the dealerships we surveyed, the average APR on a car loan for consumers with bad credit is 13.16% – it was 15.04% before the pandemic.

Two percent doesn’t seem like a lot, but it can mean a lot of savings in terms of interest charges, especially if you have a longer loan term and / or a large loan amount.

Evaluate purchases with bad credit

With interest rates remaining low until 2022, now is the time to start shopping around for rates and weighing your options for your next car loan.

The buying rate is when you apply from several lenders for the same type of credit within a short period of time. You might be thinking, “But what about all those tough inquiries that are going to destroy my credit score?” And you are partly right. Serious inquiries hurt your credit score, but only up to 12 months.

However, if you apply for the same type of credit within two weeks, just one serious request hurts your credit score. All inquiries still show up on your credit reports, but only one has an effect on your score.

To take advantage of the fact that the credit bureaus don’t punish you for looking for the best rates and deals. Make a list of the different auto lenders you want to apply with and then do it within 14 days. This way your credit score takes little damage and you can compare rates and see what lenders can do for you.

With a lower credit score, however, it can be difficult to shop around for rates. Sometimes a bad credit score means a car loan refusal, but there are a lot of lenders in the sea. If you know where to fish, sure.

Bad credit auto lenders

Special financing dealers have resources for bad credit borrowers. They are registered with subprime lenders, or bad credit lenders, and they work with borrowers in all kinds of unique credit situations like no credit, bankruptcy, and general credit issues.

When you apply for financing from a special financing broker, your information is usually sent to one or more subprime lenders. If you qualify for auto financing from a subprime lender, the lender informs the dealership of your maximum auto payment amount, and then you work with the dealership to find the right vehicle.

Another bonus? These lenders have the know-how to help borrowers in difficult credit situations. So, if you have credit problems, you are more likely to be approved by a subprime lender compared to a traditional lender.

Connect to a car dealership

It can be difficult to know which dealerships are registered with subprime auto lenders. Fortunately, we know where they are! Here has Auto Express Credit, we have cultivated a nationwide network of dealerships, we are working hard to match borrowers with the one close to them who has the resources they need.

Start by filling out our car loan application form. It’s completely free, secure and there is never any obligation to buy anything.

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About Cecil Cobb

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