All About Bad Credit Loans

A piece of paper that says 'bad credit help' is shown on a table.

If you have low credit and need a car, you'd be keen to contact a place like Paradise Motors, as we specialize in bad credit auto loans near Charlotte, MI. We take pride in working with drivers of all different credit scores, from great to not-so-good. We understand that bad credit can befall good people, so our financial experts work closely with local banks and lenders to ensure everyone can get into a great car they can count on.

If your credit has taken a hit, it's possible to get an auto loan explicitly created for those with low or less-than-stellar credit. You could've faced bankruptcy a few years back, or maybe you were a victim of identity fraud—there are many reasons why your credit isn't as high as you would like it to be. Nevertheless, you need a car to get you to work and home, and that's where a bad credit loan can help you out.


Bad Credit and What You Can Do About It


If you're not used to dealing with loans or your credit score, then you might not even know if a bad credit loan is what you need. After all, what qualifies as bad credit? Your typical credit will be based on what is known as a FICO score. The FICO score chart ranges from 300 to 850, with 300 being the very lowest and 850 being flawless.


So where does your credit score land? If it's 670, it's considered not-too-good, and you might qualify for a bad credit loan. If your score is 670 to 739, it's considered good; this is the range the majority of drivers fall in. But if your credit score isn't this high yet, don't stress—it's possible to improve your credit score over time with a little hard work and attention to spending habits.


Reflecting on your habits and history is a great way to learn what brought your credit score down and how to begin to bring it back up to where it should be. Things that impact your overall score include your repayment history for outstanding debts (like student loans or a mortgage), how often you apply for credit cards, and even the length of your credit history. Keeping an eye on your spending, paying bills on time, checking your credit score, and not taking out any new lines of credit are all day-to-day steps you can take to bring your credit score back up.


However, it's also important to remember that some things like bankruptcy can leave a black mark on your credit history and bring your credit score down for up to six or even ten years after the fact! If that's the case, it's sometimes possible to have black marks removed under certain conditions. Talking to a financial expert is one of the best ways to learn about your options.

 A set of car keys are shown in a vehicle after reviewing paperwork for bad credit auto loans near Charlotte, MI.

What Constitutes a Bad Credit Loan?


If your credit score falls in the 670-or-below category, then you would qualify for what is known as a "subprime" loan, commonly called a "bad credit" loan. These loans allow people with low credit scores to get financing when they might otherwise not qualify. These often carry a high APR because a low credit score indicates you're more likely to default on the loan than those with a higher (i.e. more reliable) score. The lender is taking a risk, so the high-interest rate of the loan is there to make up for it.


Having a trusted family or close friend with a higher credit score co-sign the loan can sometimes help bring down the risk, thereby improving the APR for the borrower. Saving up more money for a higher-than-necessary down payment is also a positive indicator for the lender and can help improve or lower the payment since you wouldn't have to borrow as much.


Bad Credit Loans & You


Before applying for a loan, you can take a few steps to make the overall process a little smoother for you. First, you want to know how much money you'll need to borrow. Save as much as you can for a down payment and then borrow the rest if needed, but make sure not to over-borrow as this can lead to high-interest rates and high payments—something you want to avoid.


If you don't need an auto loan right away, take the time to work on your credit score and raise it up as much as possible, as this can mean getting better loan options with lower interest rates. Even if you're still in the "bad credit" zone when you finally do take out your loan, if your credit rate is higher than before, you have a better chance at securing a loan with a lower APR.


Before signing on the dotted line, be sure to read over the fine print and make certain you're aware of the cost of your monthly payments. Make sure you can meet these costs on time each month. Making consistent on-time payments is a great way to boost your credit score.


If possible, pay off as much debt as possible; this, too, can help boost your credit score before applying for a loan. It also means you won't have as many monthly payments once you take out the car loan. Having fewer payments overall makes it easier to keep track of what needs to be paid and when.


If your only choice is getting a bad credit loan, you ought to choose a dealer who regularly helps those with low credit ratings; otherwise, you might be turned away more times than you would like. You'll want to partner with a local lender who knows the ins and outs of securing the best financial options for those who've had their troubles.


Saving up money for a large down payment and even having a trusted family member or friend co-sign are both great ways to get you into a new car. But be sure not to over-borrow and take out only what is needed.


Also, keep your expectations realistic. Sure, that shiny brand-new sports car is appealing, but what you need at the moment is an economical, reliable car that will get you to work on time. Borrow less now, and you'll save more for tomorrow.

A blue toy car is shown next to auto loan paperwork.


Get Into a New Car Today at Paradise Motors


When you need a car you can count on, sometimes your only option is getting a bad credit loan. While this might not be ideal, ensuring you work with a car dealer with experience in subprime car loans can turn a sour situation into an advantageous one. Get expert guidance, get your questions answered, and get a loan that works for you.


Drivers from Charlotte and Lansing who are in need of a car to manage Michigan's harsh winters or tackle that long commute know they can trust the team at Paradise Motors to get them where they need to go. Our specialists engage with our customers, helping them lock in great rates on loans that work for them and their budgets, even if their credit scores are less than perfect.


Do you need a car today but think it's not possible because of your low credit score? Think again! With low credit, things like financing a car might seem impossible, but it doesn't have to be that way. Study your budget, then stop in and talk to our financial specialists to see what steps you need to take to get behind the wheel of a reliable car that'll get you where you need to go.