Bad credit car loans are becoming more and more popular in New Zealand as people become more aware of the option. There are a number of reasons why people might choose to go for a bad credit car loan, such as the fact that they may have been declined for a standard loan or they may simply have a bad credit history. Whatever the reason, bad credit car loans can be a great option for those who need a car but don’t have the best credit history.
However, as with any loan, there are a number of pros and cons to taking out a bad credit car loan which you should be aware of before making your decision. In this blog post, we’re going to take a look at some of the key pros and cons of bad credit car loans in New Zealand so that you can make an informed decision.
Let’s start by taking a look at some of the key pros of bad credit car loans:
1. You can still get a loan with bad credit
One of the main pros of bad credit car loans is that they give people with bad credit the chance to still get a loan and buy a car. This is because bad credit car loans are specifically designed for people with bad credit, meaning that the lender is more likely to approve your loan.
2. You can improve your credit score
Another pro of bad credit car loans is that they can actually help you to improve your credit score. This is because making regular repayments on a bad credit car loan will show lenders that you’re capable of making repayments on time, which will help to improve your credit score over time.
3. You can get a lower interest rate
Another pro of bad credit car loans is that you may be able to get a lower interest rate than you would with a standard loan. This is because bad credit car loans are often seen as higher risk by lenders, so they may charge a higher interest rate to offset this risk. However, if you shop around you may be able to find a bad credit car loan with a competitive interest rate.
Now let’s take a look at some of the key cons of bad credit car loans:
1. You may have to pay a higher interest rate
As we mentioned in the previous point, one of the potential downsides of bad credit car loans is that you may have to pay a higher interest rate than you would with a standard loan. This is because bad credit car loans are often seen as higher risk by lenders, so they may charge a higher interest rate to offset this risk.
2. You may have to pay a higher deposit
Another potential downside of bad credit car loans is that you may have to pay a higher deposit than you would with a standard loan. This is because bad credit car loans are often seen as higher risk by lenders, so they may require a higher deposit to offset this risk.
3. You may have to pay a higher monthly repayment
Another potential downside of bad credit car loans is that you may have to pay a higher monthly repayment than you would with a standard loan. This is because bad credit car loans often have a higher interest rate, meaning that your monthly repayments will be higher.
So, those are some of the key pros and cons of bad credit car loans in New Zealand. As you can see, there are both pros and cons to taking out a bad credit car loan which you need to weigh up before making your decision.
If you’re thinking of taking out a bad credit car loan then we recommend that you compare a range of loans from different lenders to make sure you get the best deal possible. You can do this easily by using a comparison website like Glance.co.nz.