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6 Steps to Get a Car Loan with Poor Credit

Young lady getting a car loan

Getting a car loan with poor credit is possible

Owning a vehicle isn’t a luxury these days. It’s a necessity. Having your own car to drive means you can get to work every day, pick your kids up from school and run errands. But if you can’t buy a car with cash, you can consider taking out a car loan. Most people think that to get a car loan, one must have stellar credit standing. Good credit is important in applying for any type of loan. But having poor credit doesn’t mean you can’t buy a vehicle of your own. If you want to buy a car right now but you worry about your bad credit, here are some steps you could try.

Know what to expect

It’s important that you know what you may find when applying for a car loan with bad credit.  Bad credit has a big impact on the interest rate you will receive. Compared to those with better credit, you are more likely to end up paying a little more. Don’t lose hope. Take time to do research and shop around for various dealers and lenders to find the best deal for a car loan.

Check credit score

Before you start with the car shopping process, check your credit score. You can request a copy of your credit report from the major credit bureaus as soon as you consider a car loan. Once you have your credit report, go through it and see if there is erroneous information you can dispute. If you find any inaccuracy, make sure to dispute it right away.

Determine what you can afford

When you consider getting a car loan, choose a car loan that fits your budget. Determine what you can afford to pay on a monthly basis. It’s important to take note that the monthly payment should not be the only focus in your car loan process. Don’t fall into the trap of lenders who are offering very low monthly fees for longer terms. Chances are, the interest rates are going to be higher. Think about what you can afford as far as the total amount of the vehicle. Also, don’t forget to take the other expenses into consideration. These include warranties, maintenance, repair costs and others.

Shop around

Taking time to shop around gives you the chance to compare the offers from different lenders. If you have a time frame for car shopping, make sure it’s done within 14 to 45 days. You can protect your credit from getting further damaged. This is because a credit score is created whenever a lender checks your credit as part of the loan process. And too many credit inquiries can lower your score further. All inquiries made within the 14 to 45 day period will only count as one inquiry.

Get pre-approved

The entire process of taking out a car loan can be stressful and overwhelming. To help ease the stress, you may want to consider getting pre-approval for your car loan. When you get pre-approved, you are already aware of the terms of your financing. You can focus on negotiating the best deal and rates for your desired car.

Negotiate with the dealer

Once you have chosen a dealer, make sure to negotiate for a better rate. Don’t take the first offer especially when you are given a higher interest rate. You can try telling them you have a lower rate somewhere else. They may try to meet that offer or somehow meet you halfway to close the deal.

Poor credit might make you think twice about getting a car loan, let alone finding a good vehicle. But despite the bad credit standing, you can still shop for great cars at the best deals. For more information about car loans, feel free to get in touch with a knowledgeable used car dealer in Chicago – The Auto Warehouse.

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