Getting an Auto Loan with Bad Credit

 In Credit Builder

If your bad credit has you thinking you’re at a complete loss of getting an auto loan, think again. An auto loan can be a vital tool in helping improve your credit for the future. Don’t subject yourself to failure and guilt for a couple of bad decisions. With research, perseverance, and realistic expectations, you can still find a good deal for purchasing a car and get back on the road today! The following tips can help get you into a new car and on the road to better credit!

  1. Check Your Credit: Your credit score is determined off the FICO scale from 300-850. It’s common knowledge that higher scores will secure the best rates, but many people don’t know their actual credit score, which could be detrimental when applying for a car loan. And your score could be higher than you think! For a more accurate score, check out myFICO.com.
  2. Take the Middle Man Out: We’ve all seen the car lots with “Buy Here, Pay Here!” signs, and while it seems convenient, you might want to think again. It is essential to get financing before you ever step onto a car lot. It will give you confidence not to be swayed by additional warranties and protections you don’t need, and it also makes the car buying process streamlined, quick, and accessible.
  3. Research Lenders: It might be challenging to get approved at the big banks, so expand your search to something more realistic. Credit unions are friendly and support many people with bad credit, although you will be subject to higher interest rates. Also, look for online lenders and reviews from people who have utilized them in the past.
  4. No extra baggage: Don’t try to ignore your problems if you are dealing with a car headache. Although it seems convenient to trade in a car with an unpaid balance, you could set yourself up for a bad car deal. Many auto lenders say they will pay off their loan regardless of the balance, but they don’t explain the negative implications. If you aren’t careful, you could end up with a new car with the balance of the old vehicle tacked on to it. You could be left with an outrageous interest rate and monthly payments you can’t afford.
  5. Adopt good financial habits: Continue to pay your payments on time. An auto loan is an installment loan, which is a critical factor in calculating your credit score. If you show a good pattern of paying your loan off, it will improve your score and allow you to refinance to a lower interest rate in the future.

If you have any further auto loan questions, don’t procrastinate. Credit Care Company will get you the help you need. Please contact us today!

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