5 Steps to Get a Car Loan with Bad Credit
- June 24, 2018
- Car Loans
- Posted by The Auto Warehouse
- Comments Off on 5 Steps to Get a Car Loan with Bad Credit
Trying to get a car loan with bad credit may be challenging. But there’s no need to fret. There are ways to get on the road despite your poor credit history. Most lenders look at a person’s credit standing before approving an auto loan. But having bad credit doesn’t mean it’s impossible to qualify for a car loan at all. Don’t worry because even with a poor credit these tips will help you get approved for a loan.
Know your credit score
The very first step to getting a car loan with bad credit is knowing your credit score. As soon as you consider applying for a car loan, make sure to request a credit report immediately. Get a copy of your credit report from the major credit bureaus – Experian, TransUnion, and Equifax. If the report shows a poor credit standing, don’t worry because it doesn’t mean your case is hopeless. Your credit report is a measure of your creditworthiness. But there are several key factors affecting your score. Payment history, types of credit, credit utilization and credit accounts are considered. Then, start taking some steps to improve your score. Also, go through the report and look for errors. Make sure that all details are accurate. If you spot any inaccuracy within the report, file a dispute right away.
Determine how much you can afford
Lenders do not only look at your credit history and credit score. They also consider your ability to pay. By looking at your current income and monthly expenses, they figure out how much they’re willing to lend you. Before you even apply for an auto loan, you must figure out how much you can afford. Consider the monthly payment after taking your income and expenses into account. It’s important that you know the amount you can spend for the car loan. Once you have determined how much you can afford, make sure that you do not deviate from that budget plan.
Finance your loan with a bigger down payment
Financing your auto loan with a sizable down payment could help you get your loan approved. If you haven’t saved yet for the down payment, now is the best time to start. A bigger down payment could help reduce your monthly fees as well as the interest rate. It can also help shorten the terms. It is a lot easier and less expensive to save up for a bigger down payment than to finance your loan long term.
Loan rates vary per lenders and to make sure you get the best deal, it’s best to shop around. Explore your options before you make a final decision. Start with your local banks or credit unions. Check the deals they are willing to offer. Also explore reputable lenders and auto loan dealers. As much as possible, do not immediately take the first offer you get. Shop around and check websites online. File as many car loan applications as you can. Many credit inquiries may affect your score. Yet this will let lenders know that you are exploring your options. If the credit inquiries aren’t made within a period of two weeks, they should not impact your score.
Negotiate the best price
When looking for the best car loan deals, expect that lenders will use their best negotiating. So, don’t give in right away. Research ahead of time to be familiar with car dealer financing scams some dealers use. At the same time, always remember that you don’t have to settle with a poor deal because you have a poor credit. Negotiate your position to get the best price.
Getting approved for a car loan with a credit below average is not impossible. In fact, it should be easy with the help of these steps. If you want to learn more about applying for a car loan, please visit The Auto Warehouse.