10 Ways to Deal with a Bad Credit Car Finance
If you have a bad credit history, do not worry about being eligible for auto financing or if you are thinking about your monthly payments will be costly.
Nevertheless, having a poor credit does not necessarily mean that you are not allowed for any financing options.
If your credit rating is lower than the average, worry no more, you are still eligible to apply (and be accepted) for a car loan.
With that being said, the primary step is to get your credit checked to see if you are likely to get auto financing.
Go shop around and look for the best financial institutions and go through their financing options.
On the other hand, you can allot a budget to determine the loan amount that is suitable to your credit situation.
Without further ado, here are the top ten ways to deal with bad credit car finance:
Determine why you want/need to buy a Car – Determine what type of car buyer are you? Are you a person who is in need of a comfy mode of transportation? Or do you just want to buy a car just for luxury?
Given the following intentions, we highly recommend you to loan a car with bad credit if it is for emergency purposes; a car must always serve as a necessity and never a luxury.
Before you begin to shop for a car, determine how badly you need to buy a car.
Aside from that, get your credit checked and rethink of options such as using your current vehicle (if any), use public transportation for the meantime, or carpooling services while improving your credit rating; if you just want to buy a car for the sake of luxury, then we suggest you get credit cards.
Then spend it for at least half a year (or for one year) and then get the deposit back once you decide to close an account.
Be Prepared for Higher Rates – As a car buyer, you have to know upfront that customers with a poor credit usually pay higher interest rates and hefty annual percentage rates than those with a good FICO score.
Therefore, if your car loan has been approved, be prepared for a higher total loan amount.
If you buy a car for emergency purposes, we highly advise that you must discipline yourself to stop being an impulsive buyer to get the best financing options in the future.
Get your Credit Checked – To be able to know where your FICO score stands, you must get your credit checked.
You can get an access copy of your credit reports on the main credit reporting bureaus. Your credit history serves as a strong foundation when you plan to buy a car.
Knowing your credit score is necessary during the auto financing application once you talked about your needs with car dealers; it is where the loan term of auto financing lenders are generally based.
With that being said, all your inquiries and details regarding your credit score stance will be answered. So if you have a bad credit car dealerships history, your car loan can still be approved with the help of
various financial institutions and credit unions.
Only Go for a Car Loan that your Credit Cards can Afford – Before you apply for a car loan, you have to think twice if you can make on time payments for the loan’s monthly payments.
With that being said, monthly payments
Find the Best Financing Options – There is nothing to worry about having bad credit auto dealerships in the past if you still decide to buy a new vehicle.
As a matter of fact, it is the opposite of what most people think. Figuring out how to get a car loan despite the poor credit becomes a lot easier when you finally find the best financing options for
Go for a money lender that accepts applications from a car buyer with bad or limited credit reports. With that being said, the financial institutions that you can go to are the banks, car dealerships, credit unions, auto financing companies, and the like.
Then consider the money lenders that accept applications from car buyers with all types of credit cards. Once you find the auto financing loan for you, you better make sure to pay on time to improve your current credit situation.
Shop around Financial Institutions for 2 Weeks to One-Month Only – Shopping around financial institutions enables car buyer to compare the different financing options available based on your FICO score.
Given that intention, the credit-scoring model requires you to shop for at least 2 weeks to a one-month timeframe to find the auto financing loan that best suits your credit rating.
Avoid applying for multiple loans over a long timeframe can affect your credit rating.
Get your Car Loan Pre-Approved – Having a poor credit situation does not necessarily define you as a bad buyer. You can get your auto loan pre-approved online in just a matter of minutes. Then schedule an appointment with car dealers to help you buy a car. In fact, it is not a bad move to get your car loan pre-approved from a bank, credit
union, or any financial institutions before transacting at a credit car dealership. A pre- approved proposal guarantees that car buyer has a loan to cover the costs of getting a new vehicle.
Get a Cosigner, Co-borrower, or Co-Maker – It is always the best option for clients with bad credit history to get a cosigner, co-borrower, or co-maker. With this, there are high chances to get an auto financing loan with a competitive interest rate and good loan term.
Negotiate your Credit Rating Disposition – Having a poor credit does not mean that you must settle for a poor loan term. Negotiate the terms and conditions of the car loan; this includes the interest rate, annual percentage rates, monthly payments schedule, and the total loan amount.
Improve your FICO Score- It is never too late to revive your credit rating. You must do your best this time to improve your FICO score to get the best financing options in the future.
Given the following pointers, FICO score is not the sole factor that financial institutions based on when getting bad credit car finance. Nonetheless, you must still do your best to maintain a good credit rating and a clean credit history to get the best out of auto financing loans.
After all, credit reports with no financial discrepancies will no longer need to do the following steps above. With that being said, the process is hassle-free so pay your monthly payments and
other fees on time, anytime.