If you're on the path to rebuilding your credit, a special finance auto loan can help you reach your goal. Special financing gets its name from the fact that the terms of the loan will be different from a standard loan. Because this type of loan is for people who currently have bad credit, the interest rate will likely be higher than average, and there might be a down payment of some sort required. Here's some information to help you know what to expect if you apply for a special finance loan.
Special Finance Loans Do Not Hurt Your Credit
There are many reasons that your FICO score could go down, but accepting a special finance loan is not one of them. In fact, if you continuously make on-time payments for your auto loan, it could help in rebuilding your credit. Combined with additional actions, such as paying off credit card balances, you could find your credit score going up faster than you think.
Special Finance Loans Can Be Renegotiated
If you do a good job of making on-time payments, you could be eligible to refinance your loan. This would allow you to continue making payments at a lower interest rate, which could potentially save you thousands of dollars.
Decreasing the Monthly Payments
Like all loans, special finance loan payments can be decreased by making a larger down payment, or having a high-value trade-in vehicle. While most special finance loans will require a down payment of some sort, it is to your benefit if you opt to pay more than the minimum required amount. Even with the higher interest rate, the monthly payments will be more reasonable and make it easier to stay within budget.
Most Special Finance Loans Are Quickly Processed
You won't need to wait weeks to find out whether your bad credit auto loan has been approved. Special finance loans are usually approved within 48 hours. This is especially true if you use the assistance of an internet company, with a network of lenders that are competing for your business. Even with bad credit, you can be on the road in your next car in just a few days!
Special finance auto loans are definitely an option worth considering if you have bad credit and are working hard to rebuild it. Take heart that bad credit is not something that will follow you forever. You have the power to improve your credit score.
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