Auto Loans And Bad Credit
When you have bad or no credit, it can be very difficult to secure an auto loan. There are some tips and tricks to get around your poor or nonexistent credit to move forward with the purchase of your new car.
Improve Your Credit Score
The obvious answer to getting an auto loan with bad credit is: Don't. Fix your credit before you even try to apply for auto loan financing. Take the time to make sure you pay all your bills on time. Another huge way to improve your credit is to reduce your debt-to-income ratio. If you're able to prove that you can afford the added debt with your income, the lender may be more willing to issue you an auto loan. The downside to this is that improving your credit will take time, and not everyone can wait that long to get a new car.
Other Tips and Tricks to Secure an Auto Loan
In the event that you can't wait too long to get a new car, there are a few more tips and tricks to try.
Those tips and tricks include:
- Have a down payment ready
- Figure out how big of a loan you need
- Figure out what monthly payment you can afford
- Get preapproved
- Shop! Don't stop at the first place to preapprove you
- Get a cosigner
There are dealerships and lenders who make it known they are willing to help those will little to no credit. If you're still struggling to receive an auto loan for your new prospective car, try finding a cheaper one and trying again.
Types of Auto Loan Financing
Say you followed all the tips offered and still you can't find anyone to approve you for an auto loan. It's time to look into different types of auto loans offered to those with low credit. Keep in mind that these options may offer higher interest rates, but they do make it easier to obtain an auto loan.
Online Lender
It's getting easier to receive financing online. Try searching online for lenders who operate solely online. Online lenders seem to be more lenient when it comes to credit scores and how much they are willing to finance.
Second-Chance Loan
There are some lenders or dealerships that specifically offer auto loans to those struggling to improve their credit score.
Captive Financing
Captive financing occurs when the dealership you want to purchase your car from finances your auto loan directly. There may be restrictions on which cars you are able to finance this way, so make sure to discuss your options with your dealership.
Dealer-Arranged Financing
A lot of people choose to go this route, as it takes the hassle of auto loan shopping off their shoulders and places it on the dealership's. This is ideal because the dealer can almost instantly share your information with a number of different lenders and give you your options.
Contact a company that offers auto loans to learn more.
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