Auto Loans with Bad Credit
Credit history plays a major role in the auto loan approval process, both in the loan amount granted, as well as the interest rate and expense associated with the loan. Lenders often look for a sufficient income level along with a stable job history, but for those with bad credit, gaining access to a suitable auto loan often becomes more difficult.
However, the challenge of securing car financing with bad credit is not an insurmountable one. This article will examine how best to get an auto loan with bad credit.
Take Inventory of Your Credit Report
Individuals pursuing car financing with bad credit need to go about doing things a bit differently than those with strong credit. For starters, a few months prior to embarking on the excitement of car shopping, first make every effort to clean up your credit report. It may not be possible to eliminate high debt balances or negative items that might include a history of bankruptcy, automobile repossession, or late payments.
However, making the effort to dispute any lingering credit report errors and/or to add positive information that has been omitted from your credit report is certainly possible. Taking such actions, along with, if possible, paying off any lingering past-due accounts, will improve the chances of those with bad credit when attempting to secure car financing. In the meantime, try to establish and maintain a recent track record of timely payments on existing debts while refraining from taking on any additional credit.
Some Bad Credit Car Financing Realities
Getting approved for car financing with bad credit does come with a few drawbacks. For starters, a weak credit history will usually limit the car loan amount, and it will also come with a higher interest rate attached – sometimes twice as high as the rate granted to someone with stronger credit. If at all possible, those pursuing car financing with bad credit should try to save and make a larger down payment, which can help mitigate the costs associated with higher interest expense, as well as taxes and fees assessed on the total purchase price.
Individuals with bad credit also must budget appropriately for the new monthly auto loan payment, and make the right choices in order to minimize the monthly payment amount. Therefore, it is wise to skip luxury add-on options (leather seats, a sunroof, etc.) that will nudge the monthly payment higher.
Look Into Pre-Approval
If possible, try to get pre-approved through a bank or credit union for a specific loan amount that you can then use as leverage when negotiating the best deal for your car. Always leave room beyond the price of the car for taxes and fees. For example, a car in the $17-18,000 range will have a final price that approaches $19-20,000 all inclusive of taxes and fees.
It makes good sense to shop around and search with multiple lenders and auto loan matching engines. For those with FICO scores in the 500-525 range, there are a number of online options worth considering, including myautoloan.com, autonav.capitalone.com, carfinance.com and springboardauto.com.
How To Get an Auto Loan With Bad Credit
In a few words – be smart and be careful. Aside from what has already been discussed, the individual pursuing car financing with bad credit also has to remain alert to the possibility of dealer treachery and scams. Unfortunately, some auto dealerships that offer on-site financing (Buy Here – Pay Here) involving little to no credit check, can also take advantage of those with bad credit.
Only approach such dealerships on the recommendation of a trusted friend or associate, and always carefully read all documentation to make certain that the paperwork matches everything that has been verbally agreed upon. Never drive a car home under any circumstance without first having signed properly agreed-upon documents – otherwise an unsuspecting and naive purchaser can be coerced into signing at dramatically different terms on a later date.
No matter how badly you may want a new car, take the necessary time to shore up your credit report before taking the additional time to shop around for the best terms for your auto loan. Just because you may have taken a few missteps financially and now have bad credit does not mean that it is impossible to get a good auto loan. Far from it. Finding suitable car financing with bad credit is possible when you take the necessary time to prepare your credit report, pursue pre-approval before approaching auto dealerships, and avoid any crucial mistakes by verifying all documents prior to signing.
Are you in debt? we can help
Handling my business debt was not something I looked forward to
Handling my business debt was not something I looked forward to. But United Settlement was so patient with my questions and helped me figure out how to handle my debt as a small business owner. I qualified...
I didn't even know what type of interest rates there were and how those affected my debt overall
When I contacted United Settlement, I didn't even know what type of interest rates there were and how those affected my debt overall. So, when I went to go buy a new house, I was shocked to find out that...
Debt settlement is what we signed up for when we were interested in using United Settlement
Debt settlement is what we signed up for when we were interested in using United Settlement. We needed a company to negotiate on our behalf to help us reduce the total amount of debt we owed, and we were...
I had no idea that I could lower my credit card interest rates. But when I contacted United Settlement, they explained to me that I could negotiate my interest rates down lower along with my payoff balance....
If you have ever had an unmanageable amount of credit card debt
If you have ever had an unmanageable amount of credit card debt, you know how ridiculous it is to try to pay it off. In my situation, I did not want to wait until the last moment to get this debt under...
Medical debt is damaging to your long-term credit
Medical debt is damaging to your long-term credit. That is what we were dedicated to managing our debt as soon as we got our medical bills from an unexpected surgery that our insurance did not cover. I...
Finding a good alternative to business debt relief is far from easy
Finding a good alternative to business debt relief is far from easy. As a company, we have spent years trying to find a good solution to our business’ debt, because if we can get it out of the way we...
I had no clue that a debt consulting company could provide guidance
I had no clue that a debt consulting company could provide guidance and what type of loans you should take out. I was thrilled by the communication I had with United Settlement. They did not hesitate to...
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep
Buying a new vehicle should not stress you out to the point that you cry every night to go to sleep. But that was the point I was at before I contacted United Settlement. These guys were professionals at...
I knew I needed to file bankruptcy before I even contacted the team at United Settlement
I knew I needed to file bankruptcy before I even contacted the team at United Settlement. My biggest issue was how to file and also what type of bankruptcy I should file. A lot of people do not know that...
Who would have thought that auto loan debt can take such a toll on a family
Who would have thought that auto loan debt can take such a toll on a family? Well, we discovered how that could happen when our family bought two new vehicles. We thought we could afford the payments, but...
Why go bankrupt when you do not have to?
Why go bankrupt when you do not have to? That was my thinking when I decided to hire United Settlement. I wanted them to help me get out from underneath my credit card and auto loan debt. They were very...
Who knew that you could get credit card debt relief
Who knew that you could get credit card debt relief just by reaching out to a credit card consolidation company? I did not. But I had a friend recommend United Settlement to help me get through my debt...
We had a revolving credit card debt that just wouldn’t quit
We had a revolving credit card debt that just wouldn’t quit. This in turn made it difficult to try to buy a house. Our credit card debt literally held us back from moving forward in life. But our goal...
There comes a time when you realize you need help with your debt consolidation
There comes a time when you realize you need help with your debt consolidation. And that time came for me last year. I contacted United Settlement to help me manage my debt issues. They were friendly and...
Small business loan debt was crippling our company.
Small business loan debt was crippling our company. We have spent many years building our business, but we had to take out several loans to get through a slow period. Fortunately, those loans helped, but...
If you have ever run a business before, you know how quickly you can get into debt
If you have ever run a business before, you know how quickly you can get into debt. That’s right, you can be trying to live your best life and end up in a situation you cannot get yourself out of. That...
Our credit card interest rates were astronomical
Our credit card debt was not really that bad, but our credit card interest rates were astronomical, which meant we could not get out from under our debt as quickly as we would have liked. We used United...
I had no idea that I would qualify for business debt consolidation loans
I had no idea that I would qualify for business debt consolidation loans. But United Settlement walked me through what that process was like and gave me insight into how to manage my future debt so that...
The last thing I wanted to do is file for business bankruptcy
The last thing I wanted to do is file for business bankruptcy, but that was before I knew how common it was and how little it actually affected my personal credit. United Settlement informed me of that...