Are you facing constant rejection due to bad credit? Think low interest rates are only reserved for people with good credit? Do you think that buying a car is just a distant dream for you?
Well, this information can bring you relief and substantially increase your chances of getting an affordable car loan. Last month, Reuters published an article titled “Auto Lenders Ease Credit Standards, Terms to Encourage Lending.” He mentions that lenders consider car loans to be safe compared to home loans and credit cards. Also, lenders are now offering lenient credit terms due to weak demand for credit. One of the credit bureaus, Experian, mentioned that the percentage of new car loans offered to subprime borrowers increased 11.4% this quarter compared to last year. This means that people with bad credit can even buy a new car without any problem.
Therefore, getting bad credit car loans has become possible nowadays. There is no better time to buy the car of your choice. But still not sure about getting an affordable car loan? If you’re still in doubt, make use of these strategies and not only get instant approval for your bad credit car loan, but also take advantage of the lowest rates possible.
Preparation is the key
Buying a car is a big decision because you spend your life savings on it. It is a commitment to make regular payments. You just can’t go to a dealer without thorough research. So before you buy a car or apply for a car loan, here are some important things that need your attention.
Clean up your finances first
Whenever you want to buy a car, don’t rush into the decision. You should sign the dotted line only after you are sure what you are getting into. There have been cases where lenders have deceived unsuspecting borrowers under the pretense of bad credit scores.
It is always important to review your credit report before visiting a lender’s office. You can get a free annual copy of your credit report at annualcreditreport.com. Review all entries and discuss any unwarranted transactions and errors. It is a known fact that credit bureaus make mistakes when calculating your credit scores. You can improve your credit by eliminating all errors. Also, start making your debt payments. Even if you can pay off some of your debt, it will have a positive impact on your credit score. Doing all this takes time and that is why you should plan your car purchase comprehensively and avoid a hasty decision.
Down payment to lower your fees
The down payment you pay to buy a car can be a useful way to reduce interest rates. Making a substantial down payment of ten to twenty percent can reduce the amount of your loan, and therefore the lender’s risk. Also, the lender will be sure of your financial stability. This will definitely lower the cost of your car loan.
Cosigner: A Comforting Thought for the Lender
When you have someone to co-sign your auto loan contract, the lender has security of their money. This is so because he can get it from the co-signer if he doesn’t make the payments. Finding a co-signer is a bit difficult, but if you can manage one, it would work wonders for your car loan.
If you simply can’t find a co-signer, you can take advantage of no co-signer auto loans that come with slightly higher interest rates. However, it is important that you exhaust all your options before opting for auto loans without a cosigner.
Bad Credit Car Loans Online – A Better Option
An online bad credit car loan gives you the option of getting a car loan without leaving the comfort of your home. You can apply by logging in on your computer. Online car finance companies are a perfect option because banks do not entertain people with bad credit. To take advantage of money from a credit union, you must be a member. When you apply for a car loan from an auto finance company online, you have the option of comparing various auto loan quotes. This is not possible when you take advantage of dealer financing.
In addition, online auto finance companies work with several high-risk lenders that make it easy for them to process your auto loan application. This drastically improves your chances of getting a low interest bad credit car loan.
How to choose your auto loans with bad credit?
Choosing a bad credit car loan is easy if you read the vehicle loan agreement carefully. It is essential that you not only focus on low interest rates, but look at the big picture. Calculate the annual percentage rate (APR) which will tell you the interest rate for an entire year instead of the usual monthly rate. Also consider fees such as loan origination fees and other miscellaneous expenses that will give you a better idea of the cost of the car loan.
Check if there are any prepayment penalties because it can significantly increase your expenses if you decide to pay off your loan early. Make sure the lender is a reputable name in the auto finance industry.
A little caution can help you get the best car loan option. Bad credit is never a problem if you know how to deal with it. These important strategies and signs will help you get an easy approval for your auto loan application.
Remember that bad credit is just your history; It is in your hands to write your future. Go out and turn your car dream into reality!