Three days after submitting your auto loan application, the lender informs you that you have been declined because of your poor credit. Unfortunately, the lender to whom you’ve submitted your application to does not accept customers with below average rating.
So, what’s the next step you can do?
Subprime Car Loans for People with Bad Credit
If you have bad credit, then you fall into the subprime category. This does not mean you can never qualify for a car loan. In fact, there are lending companies that offer special car loan financing to customers with bad credit. It also doesn’t mean you should settle for an unreasonably high rate. Although you need to improve your credit standing, you still deserve to be treated fairly.
Car Loan Tips for Consumers with Bad Credit
If you’re in need of a bad credit car loan, here are tips which can help you:
Check out credit unions
. If you have bad credit, you are most likely to get a lower rate from a credit union than from a bank or commercial lending company. Don’t forget to check out your local credit union for possible financing programs.
Check your credit report.
If your application has been rejected due to your credit score, you must order a copy of your report immediately. This way, you can personally take a look into your report and make sure that it does not contain errors, unauthorized charges, or any other wrong information which could be hurting your score.
In case you discover an error, send a letter to the bureau that issued your report. After 30 days, you should be able to get a response from the bureau and if your request is valid, then you will also be sent an updated copy of your report. By correcting errors, you can instantly improve your personal credit score.
Watch out for predatory car dealers
. Consumers who do not qualify for standard car loans because of imperfect credit may be more prone to car loan scams or the target of predatory car dealers. Some auto dealers that offer financing may offer an attractive deal and quick approval. However, once you sign up the contract and purchase the car, you may be told that you did not qualify for the low rate because of your bad credit. In the end, you might be stuck in a loan with an excessive interest rate and fee.
Shop around and compare deals.
The best way to be sure that you’ve made the right choice is to explore your options and compare car loan deals. The rates and fees would vary from one lending company to another and it is up to you to compare. Once you’ve found prospective lenders, be ready to do further investigation by checking the lending company’s background, terms and conditions.
