Buying a Car with a Home Equity Loan: An alternative to Bad Credit Car Loans?

Purchasing a Car with a Bad Credit Loan

If you have bad credit, the usual method for getting finance to buy a car is applying for a bad credit car loan. As stated at the beginning of this article it's somehow difficult to get finance with bad credit from car dealerships. Nevertheless, some car dealers may be able to provide you with finance but they will probably charge you very high interest rates.

Banks do not usually provide finance for people with bad credit but if your problem is that you don't have a credit history at all, starting a relationship with a bank can be a great solution. You can request a checking account and a savings account and then apply for a car loan with them.

Bad Credit Car Loans are provided mainly by financial institutions and high risk lenders specialized in this kind of loans. The interest rate charged for providing this type of loans is usually higher than regular loans but if you compare loan quotes you may find some interesting offers. Just make sure you credit report is not pulled too many times as this may lower your credit score. If you get declined, your credit report will also show this fact, so you might want to pull a copy of your credit report yourself and ask the lenders to pre-qualify you in order to avoid harmful records in your credit history. Home Equity Loans as an alternative source of finance

Though it may sound strange, you can get finance for purchasing a car with a home equity loan. If you can't get a bad credit car loan and use the car as collateral you may be able to apply for a home equity loan using the equity you've build on your home as collateral. That way, you'll be able to obtain a considerable amount of money at a good interest rate that you can use for the purchase of your new car.

They main advantage of this procedure is the fact that you can have really bad credit and still get approved since your house is guaranteeing the loan. You'll also get a very competitive interest rate, much lower than the interest rate you would get with a bad credit car loan. And as a plus, the interest on home equity loans is deductible so you'll save plenty on taxes.

As you can see, there is no need to despair if you have bad credit. There are always ways to obtain finance even if the usual methods fail. You just need to do your research and consider different options. The car of your dreams is just a few steps away.
Tip! Getting your auto loan first lets you know how much money you have to work with and sets a realistic focus on the car buying process. Another benefit of having financing in hand before visiting the dealership is that it will keep you out of their high-pressure finance departments.

Mary Wise, a professional consultant with twenty years in the financial field, helps people in the process of securing personal loans, mortgage, refinance or consolidation loans and preventing consumers from falling into the hands of fraudulent lenders. You can visit her site and get aid for Car Loans regardless of your credit. If the link doesn't work, just copy badcreditloanservices.com and paste it in your browser's address bar.

Car Loan Financing - Buying vs. Leasing

Which option is better leasing or buying?

This is a common question amongst many car buyers. Depending on who you talk to, some people may feel that leasing a vehicle is the better option, especially if you enjoy driving a new car every couple of years. On the other hand, if you enjoy a car payment-free lifestyle, buying is without a doubt the better choice.

Difference between Leasing and Buying

There are significant differences between buying a new vehicle, and leasing one. When buying a car, the entire purchased priced is financed. With leasing, only a portion is financed. Thus, leasing offers lower monthly payments.

For example, let's say a particular vehicle is priced at $25,000. If leasing this vehicle for two years, the dealership will calculate the estimated value after 24 months, and leaser finances the difference. Thus, if the estimated value in 24 months is $15,000, the leaser will pay $10,000. On the other hand, if buying the same vehicle, the buyer will finance the entire $25,000.

Advantages and Disadvantages of Buying New Car

There are advantages to choosing the buying option. For starters, at the conclusion of the loan term, you will own the vehicle. Secondly, because buyers own the car, they are able to paint or re-design the exterior. On the flip side, cars lose their worth. Unless buyers purchase with a down payment or accept a higher monthly payment, the car will not have any equity.

Pros and Cons of Leasing a Car

Leasing is ideal for person's who prefer lower monthly payments, and for individuals who like driving a different vehicle every couple of years. With leasing, you have the option of keeping the vehicle for 12 to 48 months. Once the lease term ends, buyers also have the option of purchasing the car at its current value. For more information about leasing or purchasing a vehicle see www.abcloanguide.com
Tip! Jim Johnson writes on many consumer related topics including autos. You can find out more about new car buying tips and a how to buy a new car by visiting our Auto Review website.

Of course, there is a downside to leasing. Leasing comes with strict driving rules. For example, drivers are allotted a certain number of miles - either 12,000 or 15,000 per year. If the leaser exceeds the mileage, there is a penalty. Furthermore, any damages to the vehicle must be repaired before the car is returned to the dealership.

Find out about the Best New Car Loans with the help of ABC Loan Guide. They have information on this topic, along with a list of companies who deal with Automobile Financing for people with good and bad credit.