Understanding Guaranteed Car Finance Loan Types

Guaranteed car finance is a complex field. It's aimed primarily at those with low credit or bad credit ratings. These are the people who often have the most difficulty obtaining finance for a vehicle, whether new or used. Those with good credit usually have no problem obtaining a loan at a good rate of interest and achieve this through either a car dealer, who will use a finance company, or through their bank. Those with reasonable credit ratings can also obtain loans from these sources although with a higher rate of interest.

Through An Auto Dealer

It's certainly possible to obtain a guaranteed car loan through a dealer although if you need one, it's more likely to be for a used car rather than a new one. For a new car, as well as having to complete a great deal of paperwork including obtaining comprehensive insurance, you'll also find that the interest rates are very high. This means big monthly payments and with a guaranteed auto loan, you have to be sure to pay in full every month. In other words, unless you're sure you can meet the payments each month, this probably isn't the best option for you.

Remember that the dealer wants to sell the car and they will work hard to arrange financing, although you need to be very aware of everything in the paperwork, especially the interest rate and payments. If possible, make a down payment or use a trade-in for the new car as this will lower your monthly payments.

Used Car Dealer

It's quite easy to obtain a guaranteed car loan for a used car. Again, you'll be paying a higher than normal interest rate but the used car dealer will be able to obtain financing for you without too many problems, especially if you can offer a trade-in or a down payment. Many used car dealers specialize in guaranteed financing, although you should check their vehicle prices against the Blue Book since many will inflate them. Don't be afraid to try and cut a better deal.

Without a Co-Signer

Young people and those without established credit are often asked for a co-signer. This is someone who will guarantee the loan if they can't pay. Without close family, or if the family has poor credit, this can be a problem.

But the young, and even those without established credit, can obtain guaranteed car loans. These will either be through a used car dealer or using the Internet. The loan will usually only be for two years and if you pay back on time, you'll establish good credit for the future.

Online Loans

The best source for guaranteed auto loans is the Internet. There are plenty of companies that will offer money to those with poor or no credit. Looking through them gives you the chance to compare interest rates as they won't all be the same. However, don't expect to find a bargain loan. The application process might be simple in all cases and you'll know before you go car shopping just how much you can spend. Yet no matter who you borrow from, interest rates will be higher than on normal loans.