Getting a car loan can be complicated, especially when you have bad credit. You are confronted with loans that come with high-interest rates, as most lenders would review your credit before approving your loan. How herculean as this can be, it is still possible to get an auto loan. In this article, we will discuss several steps to follow to get a car loan, even with a not-so-perfect credit score.
One of the factors lenders consider when processing your loan application is your credit score. This score comprises a three-digit number, similar to a GPA. According to FICO, your credit score falls within any of these five categories:
Very Poor – 300 to 579
Fair – 580 to 669
Good – 670 to 739
Very Good – 740 to 799
Exceptional – 800 to 850
A credit score of 669 or less is considered either fair or poor and would make you ineligible for all types of loans. However, you can find a loans for bad credit that works perfectly for your auto needs when you plan and conduct your research properly.
Steps Preceding A Loan Application
Here are some of the steps to take before you apply for an auto loan application. By following these steps, you can be guaranteed a hassle-free application process.
Go Through Your Credit Scores
Before you shop or apply for any loan, you need to evaluate your credit score to know where you stand. You can get a free copy of your credit reports from the three major credit report bureau, namely, Experian, TransUnion, and Equifax. This report can be generated for free once every 12 months.
With your credit report, you can determine where your credit falls on the FICO score spectrum. Whereby you have bad credit, run through your credit report for negative items. It is important to check for errors on these reported items. If found, you can report them to the credit bureaus requesting that they are changed or removed from the report.
If your purchase is not urgent, it can be kept aside while you improve your credit. You can request the service of a reputable credit repair company.
To avoid your credit score from dipping, the following tips should be taken:
- Pay all your bills on time
- Lower your debts as much as you can
- Crosscheck your credit report for erroneous details
Check Out Various Auto Lenders And Their Offers
In a situation where it is difficult accessing an auto loan from major lenders, you can narrow your search to those who provide loans for individuals with low credit scores. Although, bear in mind that you may be required to pay higher interest rates. However, you can be assured that your loan will be processed with ease.
Save Enough Money For A Down payment
This is very important as well. Setting aside a substantial amount of money as a down payment can help lower the outstanding balance you would have to pay later on. Also, it provides you with a better interest rate while reducing the term of your loan.
Regardless of your credit status, having a large down payment helps you secure an auto loan. Such an individual would be easily considered by lenders.
These are some of the tips to getting your loan approved by lenders even with bad credit. If you would like to apply for an auto loan, please visit this link: car loans for people with bad credit.