5 Pros and Cons of a Car Loan Credit Waiver

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January 27, 2012

A car loan credit waiver is very popular among the people who opt to buy a car through vehicle financing, but are not able to make their payments. It is among the most popular car loan financing options, because people only focus on the advertised benefits. However, a car loan credit waiver has its share of both pros and cons.

Pros of a Car Loan Credit Waiver

  • The first and the foremost benefit is that a car loan credit waiver helps to simply reduce the amount of the loan. This means that in most of cases, the people who opt for a car loan credit waiver do not have to pay a lot of interest. This could be very helpful for people who are no longer able to pay too much interest on their car payments. This is the main reason that a lot of people are attracted towards a car loan credit waiver.
  • Another benefit of a car loan credit waiver is that it makes it possible for a lot of people to buy a car through vehicle financing, who normally could not to the high rate of interest. Usually, these people pass on an opportunity for car loan financing because they don't see a way out of making payments for a couple of years. Such people can definitely benefit from the car loan credit waiver.
  • In most cases, when a person is not able to pay his or her car loan it adversely affects their credit score. Many people can't afford to have their credit score reduced and lose their credit standing. This is where the car loan credit waiver comes in. The credit waiver helps these people to make sure that even if they're not able to make payments, it won't affect their credit score negatively.

Cons of a Car Loan Credit Waiver

  • The first problem with a car loan credit waiver is that when a car's credit is waived, it affects it value adversely. Such a car is then sold for a much lower price than usual, as its record will always show a credit waiver on its loan amount.
  • The second problem with the car loan credit waiver is that in most cases, it does not have any effect on the credit score. This means,that even if the person opting for a car loan credit waiver is not getting his or her credit score lowered, it does not help in improving their standing, either. In most cases, the people who opt for a credit waiver on their loan think that it means that they're paying their loan off, and hence it will cause their credit score to rise. This does not happen, as the credit waiver does not help improve credit.

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