CAN YOU GET AUTO FINANCING EVEN WITH BAD CREDIT?
Very few consumers can afford to pay cash outright for a new or used
car. In most cases, many are only able to finance their car
purchases by taking out auto loans from dealerships or credit
unions. Unfortunately, not everyone who applies through these
agencies is able to secure financing right away. All too often, the
reason for their rejection is attributed to their bad credit.
Bad credit is often the result of an individualís failure to stick
to credit agreements. That means a person may have had records of
missed or defaulted loan obligations, repossession or bankruptcy.
Being in such a situation can be a challenge because it can affect
oneís life in a number of ways. For one, loan options are limited
and interest rates are often higher. As such, when the need arise,
financing can be hard to come by. There is also the trouble of
ruined relationships and securing insurance coverage, rental as well
If you happen to have bad credit and are contemplating to purchase a
car, you are probably worried that you wonít be able to secure the
financing you require. However, know that bad credit does not
necessarily mean you canít take out a car loan that has a term that
fits your situation. There are actually a number of lenders out
there that caters to people with bad credit profiles. As such, even
if you have a less-than-perfect credit, these lenders can give you
the opportunity to have the car that you want by providing you a bad
credit auto loan.
Of course, when taking out a bad credit auto loan, it pays to be
careful to ensure you are getting the best deal. So to help you out
on your loan application
here are a couple of tips you can follow.
Determine Your Score. Just because someone told you that your credit
score is bad doesnít mean it really is. Donít take other peopleís
word for it. Instead, pull out all your reports, which you can get
for free from each major credit bureau once a year. Having knowledge
of what your real score is will give you enough confidence to go
through the loan process. And even if your score is low, keep in
mind that one lender can view it differently than the other, so that
means there is a chance for you to get to favorable terms.
Save Up for a Down Payment. If you have a particularly low credit
score, it is crucial that you save up for a sizeable amount of down
payment. At the least, you should prepare 20 percent of a carís
purchasing price if it is new and 11 percent if it is used. While
this can be quite expensive for a down payment, bigger money down
will not only reduce the amount you will pay over the course of the
loan term, but will also show your willingness to pay.
Shop around. Like most loans, bad credit auto loans come with terms
that vary from one lender to another. So before you set foot in a
dealership, shop around first. Get quotes from different lenders and
compare their rates. While doing this, do not be distracted by
offers of lower monthly payments. Rather look at the terms and see
the APR. This will tell you which lender can actually give you a
good deal over the long term.
Watch Out for Extras Before Signing on the Dotted Line. Donít be too
eager to sign on a bad credit auto loan contract, unless you have
studied it carefully. The last thing you want is to be charged with
hefty fees for non-essential goods or services that you donít need.
Equally important is to ensure that all the terms indicated in the
contract are final, so you will be able to avoid problems in the
future that could further put your finances at risk.
Once you have secured a bad credit auto loan, the next best thing
you can do is to improve
your credit rating
and get it right on track. Develop good payment habits and begin to
properly manage your other obligations as well. By doing these
things consistently, you can be assured that you will be able to
repair your credit in no time.