Your House Can Help You Buy Your Dream Car
In the past, people would save money when they wanted to buy a
car. Now the times have changed. There is no need to have
savings to buy a car. There are several ways of driving home
your dream car.
One of the ways is to get a car on a lease. In this case, you
can have a car but do not own it. For this service, you give
monthly lease rentals to the car dealer. This is ideal for those
who cannot afford to buy a car. You can buy a car either on hire
purchase or on a car loan. In case of hire purchase, you can
drive home a new car and keep paying monthly installments to the
car dealer subsequently. Alternatively, you can take out a car
loan from a lender to buy a car and then repay the loan in the
form of monthly installments.
All this is fine. The problem arises when you have a bad
credit history. You acquire a bad credit history when you
default on loan repayment. Late payment also has a negative
impact on the credit score. Bankruptcy also leads to a bad
credit score. You should be very careful when you apply for a
loan because if your loan application gets rejected, your credit
score gets a thrashing. Once you acquire a poor credit score, it
becomes very difficult to obtain a bad credit loan.
It is wrong to say that people cannot get bad credit car loans. There are many
lenders in the UK who offer such loans. There is a big market
for bad credit car loans in the UK. However, offering a bad
credit car loan is risky for lenders. The lender would like to
make sure that the borrower would repay the loan. Because of
this, lenders prefer secured loans to unsecured loans. A secured
loan is backed by a security which reduces the lender's risk. In
case of a default, he can sell off the property put up as a
security to recover his money. Homeowners can use their house to
obtain a bad credit car loan. Lenders willingly accept such a
security since the value of a house does not go down. Moreover,
it helps the borrower to release the equity that is tied up in
his house.