Horrible economic conditions, poor awareness about terms and conditions of credit and loan facilities, divorce and family problems, loss of job, economic recession, frauds, misrepresentation, misleading advertising are some of the factors that lead people into a financial mess.
In such cases, people often end up losing a substantial amount of their income. This leads to an even horrible condition, as they tend to miss their installments on loans and credit cards bills. Missed payments, tend to lead people into a situation that is often referred to as a bad credit. In such cases, the above said loans tend to help out people.
What is a Bad Credit?
A ‘bad credit’ is a common term that is used to indicate a bad credit report, credit rating, credit score or credit history. Usually a bad credit implies a series of missed payments or defaults. The credit rating and scores are alphabetical and numeric figures, that depict the credit worthiness of a particular person.
The formulation of a credit rating and score figure depends upon the credit-related activities of the borrower. The rating also depends upon the nature of credit facilities, that have seen delayed payments or defaults. For example, if you miss a credit card bill payment, then it is bound to have a more negative effect, in comparison to a missed mortgage payment.
Though bad credit is never intentional, there are several negative effects that tend to trouble the borrower for a rather long time. Hence, lenders have come up with multiple credit and loan facilities in order to address, such a problem.
Bad Credit Car Loans With No Money Down
The bad credit auto loan with no money down, is basically a no money down financing loan that is sanctioned to people with not-so-nice credit rating. The concept of bad credit auto loans with no money down, can be explained as follows…
The basic intention of providing such loans is to enable people with bad credit to take up auto loans. As this loan is a bad credit loan, the lender upon the application will check 3 primary factors, in order to consider the sanction.
- Credit Report: Though the loan is meant for people with bad credit, the lender will perform a routine credit check. A credit report basically tells the reason because of which the credit score crashed down.
- Current Income and Financial Status: Though the person’s credit rating is reported to be ‘bad’, the income plays a very positive role in sanctioning of the loan. In fact, the installments and interest depends on the person’s income. The lender often calculates a debt to income ratio in order to derive the percentage of income that would be spent by the person on repayment of debts.
- Details of the Car: Lastly, the lender will check out the details of the car such as engine specifications, cost of insurance and other factors such as cost of running the car, the borrower’s drivers records, etc. This is done because the car once purchased, is bound to affect the borrower’s monthly income.
The term itself implies that the loan does not require any down payment. Thus, the borrower of the car practically does not have to put in any money during the purchase of the car. This auto loan is basically a secured loan and the lien of the car lies with the lender. Manufacturers of automobiles, have started providing this service to their customers. The car loans with no money down has proved to be helpful to many, because the receding tide of the 2006 – 09 economic recession crisis has left back many tattered credit reports.