Bad Credit Loans Guaranteed Approval

Posts Tagged ‘credit score’

Almost everyone at some point in their lives find themselves in financial jam, where they need some fast cash but are having trouble getting approved because of their bad credit. This is were we are prevented with a bit of a credit paradox. The paradox being that those who have the most trouble managing their finances, are the ones who can benefit from a loan the most, but can not find any guaranteed approval loans because of their credit score. This problem does have a solution however, this is where high risk lenders come in. These lenders specialize in providing high risk loans.

What is a High Risk Loan?

A high risk loan is typically defined by two factors; the applicant having sub-prime credit, and the lack of collateral. Sub-prime refers to anyone hos has falls below the fair credit score range, typically a credit score of less than 650.  Most lenders consider anyone within that credit score range to be a severe to moderate risk, but what makes these loans stand out is the lack of collateral. This means the lender does not have any property to hold against the value of the loan, and they have nothing to collect or sell in the event the loan defaults. With bad credit auto loans, the lenders are able to take back the car to help cover the loss.

These types of loans tend to be for lower amounts, the loans are usually around $1500, but can be much smaller. These loans also carry huge interest rates because of the risk the lender is taking, interest rates of around 30-40% are not unheard of.

Types of High Risk Loans

Online Payday Loans – These loans are the most common high risk loan, they are great way to help navigate life’s unexpected expenses. Be warned, while you can often walk away with $1500 cash in hand, or wired immediately to your account, you will often need to repay the loan in full plus interest by your next paycheck. There are plenty of payday advance lenders online and most check cashing places also offer this service if you are not comfortable with an online loan.

Bad Credit Personal Loans – These loans are pretty rare, and finding lenders who even offer them is difficult. These loans are essentially general personal loans with no collateral. They are not easy to get even with good credit, because the bank doesn’t own anything in the event the loan terms are broken. An example of this would be a loan for $3000 to buy new furniture for a new apartment or house. There are a few places online who offer this type of loan, you best bet would be with your bank, especially if you have direct deposit an have banked with them a while, they would be more likely to extend a personal line of credit for you.

Bad Credit Mortgage Loans – Mortgage loans used to be the most common type of bad credit loans out there. They came second to only to bad credit car loans, but they are far less common due to the current housing market. When the market was in its prime, banks would approve almost anyone for a mortgage. Housing costs were constantly rising during that time and banks would actually make money from you foreclosing on your home. These days they are much more difficult due to decreasing home values, and would require a substantial down payment.

I, like the majority of us in the United States paid very little attention to my credit score. I actually never really cared about having credit, good or otherwise. I never signed up for any credit cards, never took out a loan or did anything to improve my credit. I did, however, do plenty to damage my credit. I had a car that was repossessed, and several medical bills that I never paid. My credit score just was not on my radar of concerns.

The only thing I ever thought I would need good credit for was an automobile purchase. Even that was not a concern to me, I told myself I would never need or want to go through the rigmarole of purchasing  new car after my first automobile purchase several years ago. I was definitely had the wool pulled over my eyes, I walked away with a $14,000 automobile that I paid sticker price for and was upside down on the loan from day one. I swore I would never purchase a new car ever again.

So I was really rocking the ‘devil may care’ attitude about my credit score range. I had a beater car that I was driving around. It was a 2001 Chevy Malibu that I had bought from a previous girlfriend of mine, it was definite trash car. She never took care of it, but she was selling it and I needed a car and didn’t want to deal with a car dealership so it just seemed to make sense at the time.

When I got the Malibu, it had just about 90,000 miles on it. I put another 40,000 on the car my first year owning it. The company i work for had me on a special assignment that year and I had to drive all around the state for training and implementing a point of sale we were upgrading to. The car was a nightmare, it was constantly over heating due to a coolant and I was required to always have coolant in the trunk so I could pull over when it was overheating and add more coolant. The coolant leak was actually leaking into the engine block and was mixing with the oil, now I don’t know if you have ever smelled burning coolant, but it is one of the worst smells I have ever encountered. This was gumming up the engine so the car didn’t always start and when it did it would cover the area in exhaust. I honestly have no idea how that thing ever passed smog inspection. Needless to say, owning a new car started to seem like a better idea by the day. I knew that my car was not going to last much longer and I had a promotion opportunity coming up that would require an commute each way, so I knew it was definitely time to look into getting a new car, and I wanted a brand new car.

How I Got a Car with Bad Credit

The first part of this story should sound familiar to a lot of you, I went to a few dealerships and was turned down and applied for car loans online. I was turned down from everyone due to in part information obtained from the credit bureaus. I ordered a copy of my credit report and quickly found out the problem, my credit score was 580. These are my actual credit scores at the time, as you can see my credit worthiness was absolutely terrible. I decided that I needed to do two things if I wanted to have any hope of owning a new car anytime soon. I needed to establish credit and investigate some of the items that were negatively impacting my score.

The first part was easy, I went to my bank and inquired about a opening a credit card, I was initially shot down on my credit card application due to my poor credit. They did offer my a secured credit card, this allowed me the benefits of a credit card, only the money was not on credit, I had to put money into the card to use it as a credit card.

The second part was a little more time consuming, but I had to investigate each individual item on my credit report and verify it for accuracy. I found a few things were inaccurate and was able to get them removed withing a month or two.

I decided after a few months that I should try again for getting a car financed, I was aware that a new car is easier to get financed for than a used car (this is explained here) so I decided to check out my local Nissan dealership. I was able to walk away with brand new car after a few hours of haggling. I feel I got a much better deal than I did from my first car several years ago. I did learn that dealerships will attempt to push a higher monthly payment on those of us with bad credit, and that this actually has more to do with the car salesman padding the price than it does with your actual loan. So definitely be aware of the purchase price when you a going to a dealership, just because you have bad credit ratings, doesn’t mean you need to take the first deal that comes your way. The ideal situation would be to walk into the dealership with your own financing worked out ahead of time, that way you can focus on the price and not the finance charge or worrying about getting approved for a loan with bad credit.