Having bad credit should never be an invitation to getting scammed. Unfortunately, that happens a lot. It also happens quite often to a buyer with bad credit.
The truth is that if you have poor credit, things could get even become worse for you if you are not very careful. This can happen if you agree to auto financing under bad terms just because you are desperate to get a car. The bad terms could lead you to miss payments, which would pull down your credit score even further.
Before we dive into the steps on how you can get bad credit car finance, we have to understand what bad or poor credit is all about.
Actually, bad credit is more like a relative term. As you should know, your credit is given a score. The higher your score, the better it is for you. A high credit score means that you pose less of a risk to lenders, just as a low score means higher risk to lenders. That is what bad and good credit scores are all about. It’s all relative.
Now, here are steps that you can take in order to qualify for bad credit car financing:
The first thing that you should do is to actually check your credit. How do you actually know that you have bad credit? Did someone tell you about it? If you have not checked it by yourself then you should do that right away.
It is important that you know for sure. By knowing what your credit score is, you would know what to expect. For best results, you should check your credit from all the major credit bureaus and not just one. Checking your credit will also allow you to catch any errors on your credit report, which unfortunately is a common thing.
After checking your credit report and you find out what you score is, the next move is for you to work on improving it. As you should know, the best way for you to improve your score is to make payments towards your bills.
If you discover some errors on your credit report, then you should do the work in order to dispute those. You should wait for around 30 days in order for the disputes to take effect.
You should consider delaying your car purchase until you have significantly improved your credit score. This is going to be a sensible move on your part. Waiting for a few months more is going to be worth it when you can get a deal that is a whole lot better.
Pre-approval means that your income and other factors will be considered by a bank or credit union, to determine if you will qualify for a loan from a lender. This would better prepare you for getting an actual car loan.
When you get pre-approved, you can go to a dealer with much more confidence.
Even if you really have a bad credit score, there are still options open for you. Your score could be as low as 500 and there would still be options for you. Dealers work with multiple lenders. Some would have as many as 20 lenders backing them up. The chances are good that one or more of those lenders will be willing to work with buyers with bad credit.
So, it is a matter of finding a dealer who will be willing to work with you, though you may have bad credit.
Look for the right dealer and stay away from the bad ones. There are some warning signs that you should be on the lookout for. Here are some red flags:
Why would they try to sell you a car even if they do not check your credit? It’s because some dealers make more money by repossessing vehicles than actually selling.
Don’t be in such a hurry in order to get your car. That means you should not sign up for the first offer or go for the first dealer that you come across. There are plenty of dealers out there and if you are patient enough, you should find a deal that would suit your needs.
There are really a lot of scammers out there who are targeting car buyers with problems regarding their credit. That does not mean that you cannot do anything about it. You have to do research on your part before you go shopping for a car so you know what it is that you can expect. It would be much more difficult to scam you if you are properly informed.
When you are talking to a dealer, you must ask the right questions. By asking those questions, it would show to the dealer that you are an informed buyer, and that you are not likely to fall for some scam.
Perhaps the most pertinent question to ask is how much your interest rate will be. Another crucial question to ask is whether there would be penalty for prepayment. That is a penalty if you will be paying the loan earlier than the agreed period. Lenders do not want that in general. They want you to go for the full duration of the agreed period because they would make more money that way.
Try to go for a shorter for a loan. The monthly payments might be higher that way but the interest rate would be much lower. In the long term, you would be able to save more.
These are just some of the things that you can do in order to qualify for a bad credit car finance. It’s not impossible to get financing even if you have bad credit. You just have to be willing to do some research on your part and be patient. If you insist on getting a car right away, then chances are that you would have to settle for a bad terms.