You think that your bad credit will never allow you to buy a new car. Although this situation does not offer you the ideal conditions to apply for a car loan, you can follow certain steps that will give you the opportunity to get one.
Check your credit
Check your credit report if you know in advance that you need to change cars. Every twelve months, Equilbi or Intre Loan can give you a free copy of your credit report. Ask and see what is hurting your credit.
Improve your credit score
If you are planning enough – six months to a year – the time will allow you to improve your credit score. Pay all your bills on time. Pay off some of your debts by paying more than the minimum. Do not apply for a new loan. These claims appear on your credit report and creditors see a desperate desire for money.
Good planning will also give you the means to save for a larger down payment. You may be able to collect the full amount of the car. You will then pay in cash and you will not need any financing. In this case, your credit report will not matter anymore.
Get a pre-approved loan.
When you decide to buy your car, ask for a pre-approved loan from your financial institution. You will know exactly how much you can afford to spend on a car.
Find a specialized dealer
Many car dealerships deal with different financial institutions. They can finance your vehicle even if you have bad credit. If this solution interests you, make sure you are satisfied with the conditions first. Check out the interest rates normally available for auto loans. You will have to pay higher interest as a result of your bad credit, but they should not exceed double the rate. Read the contract carefully before signing and inspect the car before buying it.
Get a co-signer
The good credit of a co-signer allows you to get a loan even if yours leaves something to be desired. The financial institution looks at both credit ratings. Make sure you pay your installments on time or both your credit ratings will suffer. At that point, your co-signer will be forced to make the payments for you.
Get an online loan
Looking for a cheap used car! You can then consider the loan online as another solution. Online lenders do not check your credit. They simply make sure that you have a source of income that will earn you enough to repay the loan. In the short term, you must pay your loan within three to four months.
Avoid expensive additions
Say no to options because they are responsible for the higher price of your vehicle.
Respect your budget
Regardless of the amount approved, set your budget and calculate the monthly amount you can pay for your car. Do not go over this amount.
Refinance after a year
You got a high interest rate for your car loan! Try refinancing a year later when your credit improves. You will probably benefit from a better rate. Make sure you do not pay a penalty if you repay your first loan in advance.
Improve your credit rating.
Whatever solution you choose, you must always plan for the future. Even if, at the moment, you take out a loan with bad credit, you will get more affordable financing if you improve your credit score.