Posts Tagged bad credit

How to Get a Car Loan with Bad Credit

How to get a car loanOwning a car, for many people, is a necessity of life. It allows you to get and maintain jobs and can be a real asset in living a decent life. However, getting a car also means getting financing and for many in this economy, credit rating is a problem. Still, just because your credit is less than ideal, that does not mean you can’t buy a car. If you are diligent and prepared to make the effort, the dream of owning a vehicle is within your grasp. Let us show you how to get a car loan with bad credit.

Know Your Credit

The first step in getting a car loan is to know your credit. Everyone is entitled to a free credit report every year. This report can be obtained at annualcreditreport.com. It will cost a few dollars to get a copy of your FICO credit score, but the expense is worth it. Knowing the good, bad and ugly of your credit will help you to get in fighting shape.

When you have your report in hand, do what you can to remove black marks. Pay off old debts or look into options for having them cleared. The more you can do to clean up your credit, the better you will be.

Do Your Homework

Two different lenders will look at the same credit score in different ways. This is because each lender values different things. While one may see a poor credit score and take that as gospel, another might look at payment history and your efforts to improve your score. Do not take one refusal or offer of bad terms as the final word. Research and talk to different lenders.

Car Finance Lenders

Lenders that specialize in car loans can be a boon to those with low credit. These sources know how to view your credit and often can work with you even if your credit score is low. Where a bank may offer you terms at a very high rate, a car lender might be willing to cut you a better deal.

Get a Partner

Having a partner on board can be a major boon. Not only can they help you to review the contract and terms, if they have good credit they may be willing to co-sign. A co-signer with strong credit can significantly reduce the interest rate on your new loan. Be sure that your partner understands that by co-signing they are taking on some of the responsibility for the loan.

Loan Terms vs. Monthly Payments

Too many people look at their monthly payment as the sole indicator of their auto loan. The overall terms are just as important, if not more so. If you reduce your payment by $150 a month but are going to be paying off the car for ten years, that’s not ideal. Not only will you pay far more interest in the long run, you may still be paying on the car after the time for repairs begins. If you need a ten-year auto loan, chances are you are aiming too high.

If you are looking to refinance your current auto loan, we are here to help. Drop us a line today! 800-258-3759 We can help you get a car loan with bad credit.

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How Buying a Car Can Help Improve Bad Credit

Not only are cars useful for taking you to your job or on vital errands, but purchasing one can be an important first step towards building credit.

Not only are cars useful for taking you to your job or on vital errands, but purchasing one can be an important first step towards building credit.

How Credit Scores Work

When you have a poor credit history, you may feel reluctant to take on a large amount of debt such as an auto loan. Debt is crucial to building credit. Those who have never borrowed money will have a very limited credit history, with almost as low of a score as someone who has had a troubled borrowing past.

A line of credit such as an auto loan will allow you to demonstrate borrowing power. Making payments on time and paying off your loan in the predetermined time frame will show to lenders and credit reporters that you are financially responsible. Your credit score will likely increase as a result.

Other Ways Auto Loans Help Build Credit

Auto loans have some of the most flexible options available. A car is a middle step between something much more expensive like a house and something easy to get credit for but ultimately unnecessary, such as a couch or HDTV.

Your auto loan will also add to your credit history. Financial actions you have taken recently are large factors in credit score calculations; so are the ones you have taken in the past. Buying a car and successfully paying off your loan will be carried around with you forever, providing a bright spot on your credit record.

Not just any car loan will help you, though. One should always exercise diligence before jumping into a significant amount of debt. Here are some of the best strategies for finding a car loan that will help you build credit.

Shop Around

With bad credit, you are more likely to get a high interest rate. To try and avoid getting stuck with an unreasonable rate, always shop around for the best loan possible. Consider sources such as:

Pay Off Your Loan as Quickly as Possible

Never fail to make your payment on time. Also, if you have extra cash then put it towards and larger amount for your monthly payment. More of the money you spend will go to your principal and your loan will get paid off faster.

Get a Cosigner

If you have truly bad credit and you are unable to get a loan, find someone with better credit who would be willing to cosign a loan with you. They will get you a more favorable rate and you will be helping their credit once the loan is paid off.

Start a Savings Account

Put any emergency funds you may have into a savings account that yields high interest. This will help you build credit even further. You could always use the reserve cash to make a monthly payment when money is tight.

With these smart practices, you will be able to secure a car loan that will help redeem your past credit blemishes. Your car loan could just be the single most important factor in getting you to your destination: a better financial standing.

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