Some lenders cater to the credit-challenged, providing them with financing when they are unable to receive it elsewhere. Bad credit auto financing has recently become popular, serving as a funding source for car buyers unable to get second chance auto loans from car dealers.
When applying for this type of loan, an individual should understand how marital status affects the outcome.
Obtaining bad credit auto financing from an online lender is convenient and it results in improved credit history when payments are made on time. A buy here-pay here dealer is another alternative, but these entities do not usually report the loan or payments to credit bureaus.
Therefore, they do not help borrowers improve their credit standing, even if timely payments are made.
When completing a credit application with an online bad credit lender, marital status is irrelevant. The federal Equal Credit Opportunity Act (ECOA) states that an applicant may be judged only on his or her ability to repay the debt.
If a lender considers other factors when determining whether or what amount of credit to issue, it can face penalties.
Lenders are not permitted to inquire whether an applicant is married when the person applies for a loan as an individual. If a couple applies for a loan and does not live in a community property state, the creditor may only inquire whether the pair is married, divorced, or unmarried.
Creditors are also not permitted to charge a higher interest rate to unmarried couples.
Every applicant should keep these facts in mind when applying for bad credit auto financing. If a lender asks an unpermitted question regarding marital status, the applicant is not required to answer. The lender should also be reported to the authorities so they can take action.
Any violation of the Equal Credit Opportunity Act is considered unlawful and punishable by entities like the Justice Department.
