Are you ready to apply for a bad credit car loan?
Many people are in need of a car loan but may hesitate to apply because of their bad credit. If you can wait until your personal credit improves before acquiring a loan, then you will certainly be in a much better position to negotiate.
However, if you really need a loan at this point, then you need to prepare yourself before approaching a prospective lender.
Check your credit report.
Order a copy of your personal credit report from each of the three major credit bureaus. Carefully examine it and make sure there are no errors which can be causing your score to drop even more. If you find any, send a letter to the bureau to request for correction. By correcting errors, you can instantly increase your credit score. Remember, the higher your credit score is, the lower your rate will most likely be.
Consider your qualifications.
There are lenders who are willing to extend financing to customers with bad credit but they need to meet other requirements. For instance, a stable employment history is a basic requirement for most loans. If you’ve just been hired recently and is still under probation, you might need to wait until your employment status becomes permanent before applying for a bad credit car loan. To avoid your loan application from being declined, check the lender’s requirements first and see to it that you will qualify.
Compare loan rates.
You can request for free auto loan quotes online to get a better idea as to how much the rate and monthly loan payments would be. You will be asked to enter a few details such as the amount of loan you need, your credit score, and the length of repayment period you prefer. Take note the quote you will get is only an estimate. Your monthly loan fees can increase or decrease after the lender evaluates your car loan application.
Request for a lower rate.
Even if you have bad credit, it is still a good idea to try to negotiate for a better repayment term. Inform your lender that you are doing your best to regain good credit standing and that getting approved for an auto loan would be a huge help in improving your rating. Be prepared to put down a bigger security deposit or arrive at the dealership with a co-signer. Many lenders will consider reducing the rate if the borrower can show why they are not as big a credit risk as their credit report makes it look.