Finance + Leasing
How To Get An Auto Loan With Bad Credit
|
|
|
So you’ve fallen on hard times or made some bad financial decisions in the past and now your credit score is shot. How can you convince a dealership, bank or other lender to give you a car loan with bad credit?
Do Your Homework
A buyer with bad credit cannot go to just any lender or dealership to get financing on a car. It’s important to do your homework and research your options including dealerships, banks and other lenders. The internet is a great resource for information and quotes on car loans. There are many online car loan companies that might fit your needs also.
Remember that you don’t have to finance your purchase through the dealership from which you purchase your car. You might find a better deal somewhere else. In fact, many dealerships that offering financing to anyone with bad credit, sometimes called “Buy Here Pay Here” dealerships, will end up charging interest rates as high as 30 per cent. Not to mention that these dealerships often stock older cars with higher mileage and potential mechanical problems. The retail prices of the cars tend to be higher at these dealerships as well.
Their Specialty
Having bad credit means that you’ll most likely have to seek out a company that specializes in bad credit car loans. These companies are used to working with people who have low income, have declared bankruptcy or have other serious credit problems. You should have a steady job and reliable monthly income before you start looking for financing or you’ll be seen as a high-risk investment. A bad credit loan company can help you pre-arrange your financing, meaning you can go car shopping knowing how much you can afford.
What You Need To Provide
Every lender is different so there is no set list of things that the company you’ve chosen will require from you. You will have to fill out an application with details of your personal information including the state of your finances. Some companies may request proof of your residence and employment.
Negotiate
Many individuals with bad credit believe that they have to take what they can get when they go to purchase a car, but you should always try to negotiate the best deal for a vehicle no matter what the state of your credit. Be realistic about your circumstances, but don’t let a car salesperson take advantage of you because of your past financial troubles. If you have financing in place from another lender before you start car shopping, you won’t even have to mention anything to the salesperson about your credit score until you’ve agreed on a price for the vehicle.
Not Your Dream Car
Beggars can’t be choosers and people with bad credit shouldn’t expect to be able to purchase their dream car. It may be necessary for you to purchase a lower priced vehicle without the bells and whistles you’d ideally like to have. You can use that purchase to build your credit back up until the day that you can afford to finance the car of your dreams.
Down Payment
If you have money to put towards your purchase as a down payment, it will be easier for you to secure financing even if you have bad credit. The bigger your down payment, the less you owe, making the loan lower risk for the lender. The size of your down payment will also determine the kind of interest rate you receive on your car loan.
Shop Around
Don’t accept the first quote you get from a lender. Shop around and compare the offers from a variety of sources. Once you find the right lender at the right interest rate, be sure to keep up with your payments so you can rebuild your credit and have much less trouble next time you wish to purchase a vehicle.
|
|
|
|
|
|
|
|
|
|
|
