Searching for an auto loan can be a daunting process if your credit isn’t as good as you would like it to be. Things happen in life; you go through school, you sometimes have to live on credit cards, etc. However, some lenders understand this, and have opened up to offering loans to almost every level in the FICO credit score scale.
In order to see if you can get a car loan with bad credit, the first thing to do is conduct an internet search. With this, you can get an idea of the kinds of things to expect once you hit the road, so to speak, in search of favorable loan opportunities. Here, you’ll see the must-do’s that are necessary to increase your chances of getting the best interest rates possible for a given credit score.
Understand What You’re in For with Bad Credit
Although there are a plethora of options these days, it helps to prepare yourself for the fact that you’ll be paying more interest than someone with good credit. This is because the lender must shift the risk of taking a chance on someone with a less-than-stellar credit history right back to you, in case you default on the loan later.
Knowing Your Credit History is a MUST!
This puts you in a better position in a number of ways. First of all, you know what the dealer is going to see; although it’s true he’ll use a different number, it’s still related to your credit score. By federal law, you can get one credit history report every single year from TransUnion, Equifax and Experian. To get a report from all of them at once, order your credit report from AnnualCreditReport.com by signing up and following the directions in your browser.
Another reason why should do this is so that you can locate mistakes; some of these, once fixed, could raise your credit score and make you eligible for lower interest rates from the multiple auto dealers you’ll be checking out.
Conduct a Search for Lenders
Since you almost certainly have a computer in front of you – or a tablet, phone or ultrabook – your search for lenders begins online. There are outfits that are specifically seeking people just like you; they understand the perils of having bad credit and are willing to work with you to secure a good car loan.
There are many places you can try to get a lender; there’s no need to feel restricted to a particular website unless the terms are unbeatable. Try a credit union, for example. A lot of the times, they have better deals than auto dealerships. Finance companies, local banks, etc are also options. The big banks such as Capital One and Chase provide loans for new and used vehicles, so you can try these, too.
During your searches for lenders, make sure you try and limit your credit inquiries to between two weeks and a month-and-a-half. The reasoning behind this timescale is simple: every time you or a lender does a credit check, it lowers your credit score. If you, however, do multiple such checks within a short time period, they’re all counted as one.
How Much Money Can You Afford to Pay?
The Web helps with this a great deal. You can use a car payment calculator at a number of websites, which will let you know your monthly payments down to the dollar for a given interest rate. This is why it’s so important to talk to lenders first, to see where you rank in their auto loan offer scale.
With these resources, getting a car loan when you have bad credit isn’t such a daunting task.