Car financing is usually possible without any problems. But those who are burdened with negative entries, for example, by a loan default in his credit, will quickly experience a disappointment. But still, a car loan with negative credit is possible.
The car loan with bad credit has a higher interest rate
Very rarely will a loan request for a classic bank on a bad credit be successful. Alternative financial service providers make the Internet available. As the demand for non-scholarly loans continues to increase, a large number of service providers have specialized in this group of people. Not only the growing market is the decisive factor, also good returns can be inserted.
Because a car loan with negative credit is provided with risk premiums, which entail a high effective interest rate. The normal loan amounts needed for a car purchase usually range between 5,000 and 15,000 euros. For these loan amounts, with good credit ratings, interest rates around 5% are feasible. In a car loan with negative credit, this interest rate will double. The entry in the credit is indeed a disadvantage in the search for credit, but not only relevant. Much more important to the banks is their regular income.
That should be higher than the seizure-free limit. Since the income is the only guarantee for the loan, a comprehensive wage assignment is required. In other words, in the event of a loan default, the garnishment is carried out immediately. For a car loan with negative credit not only moderate income should be present, but should also be small, the number of people for which the borrower has to pay.
The chances of success
Unemployment benefit are not accepted as income. Even those who have a fixed-term contract or are still in the probationary period, for whom there are bad prospects for a car loan. In addition, the age of the borrower must be between 18 and 58 years. A second borrower, co-applicant, could have a positive impact on credit.
To consider as a disadvantage are further loan commitments, because thereby decrease the funds for the new installments. The sum left after deducting all obligations should be so high that the car loan with bad credit can be repaid quickly. Cheaper conditions are then also available.
The term is also linked to the interest rate. Should there be a cheap loan, the term should be 48 to 60 months. Especially with a car loan with negative credit should be remembered that the car is a crucial security for the loan. The loan should not run longer than the car is used. Otherwise, there is a risk of over-indebtedness when the next car purchase is due.