Can I Get an Auto Loan With Bad Credit?
Many people aren’t aware of the importance their credit score holds. In fact, a large majority of Americans don’t know what a credit score does or why they should really care about it. The unfortunate truth is that this leaves many to learn the hard way later on.
Maybe you’ve found yourself in this position yourself. You’re looking to purchase a new car but need to take out a loan in order to finance the vehicle. Of course, you’ll find that it can be difficult to get an auto loan with bad credit.
What can you do if this is your situation? While it might make things more difficult for you, it doesn’t have to be impossible to get the auto loan that you need. Read on and we’ll walk you through everything that you need to know.
Understanding Your Credit Score
The first thing you’ll want to do is rectify the mistake from the past and get on top of your credit score. If you don’t know what your credit score is, just that you’ve been rejected, it’s time to look into that score.
Your credit score is decided based on a few different factors. For the most part, it is based on your history of borrowing and returning money. The more you’ve borrowed and returned on time, the better your score is.
If you’ve borrowed and returned money late or failed to return the money, your score will go down significantly.
For most people, the place where they first build credit is with a credit card. If you’ve made repeated late payments on your credit card, this will drive your score down and down.
It’s also possible to have a low credit score simply because you have no credit history at all. A lack of information means most credit reporting companies can’t vouch for you one way or the other. You are an unknown entity, which means your score will be lower than someone who has a proven history of paying back what they borrow.
Once you get your score and understand how you landed there, you’ll be able to take steps to rectify it in the future. You don’t want to find yourself here again.
Save For a Down Payment
The less money you’ll need to borrow, the higher chance you’ll have of obtaining a loan. This means that doing everything you can to lower your loan amount will be a smart way to increase your odds of getting one.
One efficient way to do this is to put a larger down payment on the car. The more you can provide as a down payment, the more you’ll give the vehicle retailer and the moneylender peace of mind. If you can save up some extra cash in the months leading up to your vehicle purchase, it can save you a lot of trouble later on.
It will also decrease the amount you’ll have to pay back on the loan. Bad credit sometimes means having to take loans out with higher interest rates. The more you can put down in payment as opposed to borrowing, the less you’ll have to pay back in interest later on.
Shopping Around For Loans
There are a lot of places to look for an auto loan, even when you have bad credit. As you might expect, the most popular and traditional money lenders might be more difficult to approach when you have bad credit.
Major banks and other such establishments have so many people coming to them for loans, it will be hard to stand out and make a good impression with your less than stellar score. Banks are more risk-averse than ever and likely will refuse to take you on unless your score is near-immaculate.
That doesn’t mean you need to give up hope, however. There are many other money lenders and financial entities out there. Many online lenders are more willing to do business with those who have low credit scores.
Not only that, but they tend to process applications and transfer funds at a much more efficient rate. That means if you’re in a hurry to get your auto loan going, an online lender might be able to do so in a fashion that even a bank couldn’t.
Do your research! Looking around might be able to reveal some stellar loan opportunities that you didn’t know were available to you. Just make sure that you’ll be able to pay back what you borrow!
Have a Friend Help Out
Some establishments that offer loans might also be willing to provide a better deal to you if you have a friend or loved one who agrees to co-sign with you. This means that if you fail to pay back the loan in a timely manner, your friend or loved one will be on the hook to pay it off for you.
If your friend or loved one has a much better credit score than you, you can kind of ride on their coattails to get an auto loan. Of course, you’ll want to be totally sure you can pack back the loan on time. Otherwise, you’ll be potentially damaging your relationship.
Obtaining an Auto Loan With Bad Credit
A low credit score can be a barrier to so many different opportunities. If you’re attempting to get an auto loan with bad credit, the above information can be helpful in getting you past this tricky obstacle.
Have more questions about obtaining an auto loan with less than stellar credit? Give us a call anytime for assistance. We’d be happy to help you see what’s possible.