Tips On How To Get A Car Loan With Bad Credit Or No Credit
One of the most important things considered by a financial lender when deciding whether to offer a client with no or bad credit a car loan is the amount of money being put down. This is what usually determines the interest rates the client will get as well as the loan term they will be granted by the lender. Some years back it was really hard to obtain an auto loan if you had a poor credit history but time changes everything. Actually, the average credit score to finance a car loan has quite dropped and people are getting even more substantial car loans. It has gotten to the point where lenders are even providing low monthly instalments.
Tips to get an auto loan with no credit or bad credit
1. Know your credit score
Aside from the credit report, which you can get from the marquee credit bureaus for free once per year, you need to get your credit score. This you will get from the same agency stated above or from FICO for a fee. Once you know your credit score, you will have an idea of what you can and cannot afford. You will also get an estimate of how much interest would be demanded of you.
2. Check out different lending companies
Different lenders will use different criteria to help decide whether or not to approve your loan application. Your credit score will definitely be one of them but regardless of how bad it is, you cannot assume that you don’t qualify for the loan simply because one lender would not approve, there are others who would be willing to offer. For this reason, it is wise to compare multiple companies so you get the deal that suits you best.
3. Save your money
To purchase a car, the larger the down payment is the better for the buyer and more importantly for someone with bad credit. More lenders will be willing to grant you the deal if you can at least shell out 20% of the price as a down payment for a new car and 11% for a second-hand car.
4. Obtain a loan instead
It would be a lot wiser to obtain a loan from a bank or a credit union instead of going to the car dealer. Offers from dealers could get really costly and could affect your credit score even worse.
5. Buy a second-hand car
For someone with a bad credit history, it would be easier to secure a loan for a used car than it would be for a new one. Second-hand cars can give a good value for a low price but of course, you need to know as much as you can about the car before you purchase it. It would be smart to have it checked by a mechanic and determine the market value for it. Check its history as well, so you aren’t conned.
It is no longer difficult to get an auto loan with bad credit as long as you know how to go about it. Make sure you agree to all the terms without missing anything before you sign the deal.