How To Get A Car Loan With Bad Credit

How To Get A Car Loan With Bad Credit

Obtaining a car loan with bad credit is nothing short of difficult – but it is totally possible. Remember that you have to go into the process with the right facts in mind: You’re going to be paying higher interest than someone with a good credit rating. However, don’t let that come as a discouragement just yet – bad credit installment loans online with guaranteed approval can possibly come to the rescue!

 

Buying a Car with Bad Credit

It’s time to look at the detailed procedure of obtaining easy car loan approval with bad credit in order to finance your next vehicle!

 

1. Verify your credit score

So, you’re thinking about purchasing a new vehicle? Before anything else, check your credit score! Even if you’re still months away from physically purchasing the car, you definitely want to start cleaning up your report before requesting a loan. By doing so, you’re certainly going to improve your chances of being accepted for said loan under good terms. In order to “clean up” your credit report, you need to pay off late accounts, discussing credit errors and increasing the positive information found within your report.

 

2. Improve your bad score

Another reason why verifying your credit score right from the start is in order to visualize exactly what needs improving. It’s actually possible to find credit errors dispersed throughout your credit account and it’s important that you  dispute these. In general, you should give yourself a 30-day grace period in order to have these mistakes looked at and fixed if necessary.

On the other hand, if your credit rating isn’t that bad, then cleaning up is in fact still a good idea. As we mentioned in an earlier article, a good credit rating is market at 700 or higher and by cleaning up your credit account, you just may get pushed over that line!

3. Know Your Budget

Like with everything, being well aware of your actual financial budget is a must. Knowing exactly how much you can spend per month on a vehicle will give you a better idea of what car models you can start looking at and which ones you should stay away from. You can also go deeper into your research by looking at average auto loan interest rates and the car’s cost – this will provide you with a better basis for negotiation.

As you can already start to see, purchasing a car and obtaining a car loan are not out of reach, even if you are dealing with bad credit. Just make sure your using your time wisely!

 

4. Think about having a co-signer

One of the simplest ways to be approved for a car loan with bad credit is through the use of a co-signer with good credit. In the eyes of a lender, a co-signer decreases the risk of lending to someone with bad credit. Although your co-signer is definitely assuming responsibility by signing for a car loan with you, you may actually be capable of obtaining a better interest rate!

 

5. Get  pre-approved car loan

Sometimes, it becomes easier and more realistic to car shop with a pre-approved loan. When discussing with your bank or credit company, don’t forget to question the possibility of taking the pre-approved route. However, this isn’t always possible and if this is your case, you can always discuss different options with your car salesmen. They may have further information on who, or where, you can contact a lender who works with buyers dealing with bad credit.

 

6. Take the time to negotiate!

Let’s face it – you’re not alone in this world with a bad credit score and this is a good thing for you! In other words, you don’t always have to settle for the first “deal” that comes your way. Saving money is possible if you take the time to negotiate a little, especially when it comes to interest rate, annual percentage rate, loan length, repayment penalty and even other additional fes.

 

7. Put money aside for your down payment

A down payment can help in many ways – especially if you can afford one. First of all, not only does this cash go directly towards decreasing the total amount owed on your vehicle, this money is equally interest free. Furthermore, your lender will definitely take your down payment into consideration when weighing the risks of providing you with a loan – even if you have bad credit.

Moreover, the down payment will reduce the size of your monthly payments and can even be the deciding factor in obtaining the car loan that your looking for!

 

8. Say “NO” to the extras!

Alright, if you’re dealing with bad credit, you might have to make a few sacrifices. When applying for a loan, you may not be approved for the highest possible amount and therefore, certain features such as leather seats, a sunroof and air conditioning may have to be crossed off your list. Keep in mind that because of your poor credit, you’re already facing a high interest rate so make sure you know how to say “No” when need be.

In the end, you can buy a car with bad credit if you follow the above steps to the T. Keep in mind that looking at all your options, fueling up on important research and refusing extra add-ons can really save you good money when it comes to purchasing your vehicle. Whether you’re dealing with bad credit or not, budgeting your finances properly and being fully aware of what you can genuinely spend is the first step in purchasing your new ride intelligently.