Finding auto financing with flexible terms can be hard, but it is a greater challenge if you have no or bad credit. To get a loan, lenders accept applications from borrowers with a certain score and a good debt-to-income ratio. However, getting a suitable bad credit car loan in Arkansas with a financial lender could get easier if you consider the down payment required, the condition of the vehicle, and the length of the repayment term.
What Options are Available?
Regardless of your credit profile, finance companies offer two types of financing for car loans: used and new car loans. J P Capital Auto Loans says that usually, the financing for a new car has higher interest rates and harsher borrowing terms. Depending on your situation, you can either acquire a secured or unsecured bad credit car loan in Arkansas.
Secured Credit Car Loans
A credit car loan is referred to as secured when the vehicle to be acquired guarantees the loan repayment. Usually, the interest rate for a secured loan is low and fixed throughout the repayment period. Additionally, to get a secured bad credit car loan, you need no or little down payment and an approval rate of above 95 percent. Lastly, the amount you can receive for your vehicle financing will vary depending on your collateral.
Unsecured Bad Credit Car Loans
Unsecured bad credit car loans have no collateral thus posing a higher risk for the lender. This, in turn, prompts the lenders to make this option more expensive and unaffordable to the majority of the borrowers. The lenders offer this type of loan in smaller amounts and in high-interest rates to lower their risk of loss. Unlike secured loans, the vehicle has no pledge and the lender cannot repossess it in case of default payment.
With the current economic situation, lenders are more than ever willing to offer financial assistance to customers of the different credit profiles. Often, your credit score plays a huge role in deciding how much loan you can get; however, in case of bad credit, lenders take into account other factors to determine your credit worthiness. Go past your credit score and drive today.