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Bad credit auto loans can be obtained through autodealerships, online lenders, and high-risk lenders. They areusually available for the people with a credit score of lessthan 600. Such a low credit score can happen after adivorce, bankruptcy, or poor financial decisions.

Since a lot of risk is associated with auto loans badcredit, the lenders compensate themselves by charging ahigher rate of interest than the normal auto loans.

To ensure that you get the bad credit auto loan on the mostfavorable terms, you must research the loan marketthoroughly. However, this has a disadvantage because if yousubmit your loan application to a number of companies, thenyour credit score would go down even more.

Thus, you need to look for an organization that would find anumber of bad credit auto loans for you, but would onlycheck your credit report once.

Another way to get a bad credit auto loan is with a homeequity loan, because the interest rate on a home equity loanis lower than that on a bad credit auto loan. Moreover, theinterest on a home equity loan is tax deductible.

However, one of the biggest disadvantages of this type offinancing is that you need to offer your home as acollateral security, and thus, if you default on therepayment of the loan, you may lose your home.

Before opting for a bad credit auto loan, you need to findout the value of the car, and then deduct the amount ofmoney that you have from this value. This would determinethe amount that you need to borrow. You must also estimatethe monthly amount that you would be able to pay for the badcredit auto loan.

This will leave you with a rough idea of what your financialsituation is and how it will enable or disable you to repayyour loan..

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