Special Car Financing

Today, the average person’s lifestyle is such that he needs his own car.  A car is quite expensive but fortunately car loans, including special car financing are easily available, making the purchase much easier.

Need for Special Car Financing

When a person applies for any kind of loan, the lender first looks at his credit score.  A person with good credit is always the first preference of a lender, as he is likely to be prompt in paying back the loan.  This applies even for a car loan. A person with a weak credit score is more likely to miss out on the loan installment.  So a car loan lender may hesitate to provide him the required funds for buying the car.

However, the low credit rating may be due to circumstances which are beyond the control of the prospective car buyer.  If he is a salaried person, he may have lost his job and may be in the process of looking out for another.  If he is a businessman, his debtors may not have paid him.  Such situations would result in people skipping their mortgage payments and other loan installments resulting in a poor credit score.  Special car financing would help such people to buy a car and they would surely be able to make regular payments on the loan once their finances are steady.

People with weak credit scores also have a right to own a car.  Since banks and traditional car loan lenders hesitate to grant car loans to such people, there are lenders who offer the facility of special car financing.

Who uses Special Car Financing?

It is true that people with bad credit need special car financing, but low credit is not the only reason for rejection of a car loan request.  Lenders are often hesitant to grant loans even to people who are self employed and also people who do not earn regular salaries, as these people may skip payments in lean months.  Special car financing caters to the car buying needs of such individuals too.

Features of Special Car Financing

  • The interest rates are quite high ranging from 5 to 25% depending on the degree of risk.
  • The down payment amount is also generally huge. The car buyer may have to pay 20 to 50% of the price of the car upfront. 

Special Car Financing – Another Perspective

One more aspect of car loans is also referred to as special car financing namely, car loans which are available at very low rates, sometimes as low as 2%.

Car companies or dealers provide this kind of special car financing for the following reasons

Many units of a specific car model may be lying unsold due to lack of customer interest.  A low interest loan would surely attract buyers resulting in greater sales.

  • The automobile company may have released a new car model and would like to sell off the older cars as quickly as possible.  So they offer car loans at lower rates inducing car buyers to purchase those cars.

Rebate vs.  Special Car Financing

Car dealers often give customers a choice between a rebate and special car financing.  So the customer may either get a discount on the total price of the car or a car loan at lower rates.  A person wishing to buy a car under such an offer would have to see which of these would result in greater saving.  Depending on the deal, sometimes a rebate works out cheaper and at other times special car financing would be the better option.
In either context ‘special car financing’ is useful to the car buyer.  In the first case, a person with low credit who would have found it difficult to get a car loan is able to finance his car purchase.  In the second, customers can buy cars by taking loans at low interest rates.