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An individual's credit history or the credit score is of prime importance in the auto loan sector. Most countries keep a tab on an individual's credit history or credit score by keeping track of the individual's or a company's borrowing as well as repaying capacity. This also includes payment patterns, late payments for instance as well as bankruptcy.
In the U.S. the information that is given by the applicant while applying for a credit card, is forwarded to the credit bureau. This information is then stored and processed by the bureau and retained for further use.
Just like in the case of any other loan, availing an auto loan for someone with a bad credit is not going to be easy. However, there are card companies who exclusively cater to individuals with bad credit and offer them the auto loans. This comes as a boon for those who have very bad or really low credit rating. These companies help car buyers (who have bad credit) find auto dealers who would not mind giving these individuals another chance. The approval is pretty fast and most often these are reputed dealers in the U.S.
These card companies are there to help even the ones who have no payment history whatsoever as well as the ones who cannot afford a down payment. Even serious situations such as multiple bankruptcies, history of bad checks (due to insufficient funds, multiple repossessions, delinquency on current obligations, etc, are all taken care of by these cards and auto loans can be availed.
This has come as a blessing for all those hundreds and thousands of people who require modes of transport for their everyday lives. In general, used car dealers offer a better deal than the new car dealers. This way the used cars could be disposed off easily and the negotiations with the ones with bad credit are much more. These vehicles are generally loaded with features and come at a lower price.
Once the approval is done, the lender determines the DTI or the debt to income. Based on the credit scores as well as credit history, the interest rates would be calculated. The term of the loan as well as down payment requirements would all be based on these factors. However, one needs to get a proper understanding of this before making the purchase. The focus should be more on rebuilding one's credit history than making a fancy purchase.