A car is every man’s need and every woman’s style.
Anyone who lives in America knows the importance of automobiles. Car loans are necessary for buying new cars or used cars. Most Americans often have a misconception that bad credit score can ruin their chances of getting guaranteed approval auto financing. But, the reality is something else. Getting guaranteed approval on car loans is easy even when you have poor credit. You just need to know how to reduce the lender’s risk and increase his faith in you.
Know your Financial Affordability
Buying a car is a big decision and you must be very sure of it before signing the contract. You must understand that auto buying process involves several costs. You will have to incur expenses like taxes, DMV registration fees, insurance, fuel charges, repairs and maintenance, etc. If you are financially ready for paying all these expenditures, only then opt for buying a car. Otherwise, you will end up harming your credibility and your credit score to a further extent.
Clean up Your Credit Report
Reviewing your credit history is extremely necessary before applying for any loan. When you have bad credit score, it becomes all the more important.
You must review your credit report for any discrepancy and unwarranted transactions. If there have been any unauthorized inquiries, you must immediately report it to the credit bureaus with valid proofs. Also, try and pay-off few debts. Both these actions will help in improving your credit score.
Go for Reliable yet Cheap Car
When you have bad credit, it is best to build your credit score by opting for a car loan with lower amount. If you go for extravagance, you may have to face tough time in paying off the loan.
Choose a car that satisfies your needs. If you have to travel longer distances, go for a fuel-efficient car. If you have a band, then a huge car with enough space for musical instruments is required.
So, take some time for thinking about the purpose of your car.
Co-Signing can Help
A bad credit score means lenders have less trust in you. They may shy away from you by looking at your credit report. But, you can get guaranteed approval by asking someone to co-sign your car loan contract.
Remember that not everyone can co-sign. It is essential that your co-signer has a good credit score and a decent debt to income ratio.
Down Payment is Another Factor
Down payment can be best used to combat bad credit score. Make a down payment in the range of 10%-20% of the car cost. By doing so, lenders will know that you are financially capable of handling payments. The logic is simple. When you can pay such a large amount, smaller monthly payments won’t be any problem for you.
Research for the Best Lender
Not every lender in your area will offer bad credit auto loans. Only subprime lenders offer car financing programs to people with bad credit. So, you must do a thorough research before applying with lenders.
Online car financing can serve you best in getting a bad credit car loan. These companies work with several subprime lenders which makes it easy to get guaranteed approval. Also, you can expect quick results because the entire process is online.
Once you are assured of company’s reputation, apply and get approved for affordable bad credit auto loans.
Don’t take a hasty decision in choosing your car loan. You must spend time on every aspect of the auto loan process because it will have a major impact on your credit score. Improving your credit score can be possible only when you choose the right car loan for you.
All the best!