What Are Indirect Bad Credit Auto Loan Loans?

A bad credit auto loan is a type of financing which is given to applicants who have a record of poor credit history and have faced problems with borrowing and paying back in the past. The lender doesn’t know whether the applicant could be trusted with the finances or not which is why most applications were rejected in the past. However, the things have changed and the bad credit auto loan provisions have allowed many bad credit borrowers to get the finances without facing rejection. However, these loans aren’t provided by or at a single place due to the fierce competition between the different lenders and dealerships.

Therefore, the applicant has several places to which he/she can apply for bad credit auto loan and this is what makes the division of direct or indirect auto loan. Basically, when the finances and car is acquired from a dealership, car lot, buy here pay-here car lot etc. then the loan is called bad credit auto loan. This is because it isn’t the dealer which gives the money to the applicant or gives the car just like that. They need the money to show the selling of the car is done which is why they have their lending institutions who are transferred all the loan applications. The applications are returned with approval, rejection and the interest marked on the approvals.

The dealers just form a bridge between the finances and the applicant and ensure that the borrower can get the finance from a single place. Hence, it is termed indirect bad credit auto loan because of the fact that it is acquired indirectly from the lending institution and via a dealership. This also makes the bad credit auto loan risky because the borrower doesn’t know whether the dealer can be trusted with the interest charged on the loan.

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