10 Ways to Get A Car Loan with Bad Credit

10 Ways to Get A Car Loan with Bad Credit

 

A lot of people face the issue of having bad credit, and it often seems almost impossible to get resolved. Recovering from something like declaring bankruptcy or losing your job and falling behind on your bills can create an extremely difficult financial situation. Getting into debt is a lot easier than getting out of it. But having bad credit doesn’t eliminate your need to own a car, and a vehicle can be the key to getting a better job or just making your life a little bit easier. Here are 10 ways and key steps to getting a car loan with bad credit. 

Check your credit report

If you’ve ever heard that even checking your credit score can lower it, that is false. Checking your own credit report is known as a soft credit inquiry. A hard inquiry, such as lenders checking your score to see if you are a good prospective borrower, does impact your credit score. So, make sure you check it, whether you’re using a free service such as Credit Karma, or signing up for a paid service that may give you a more comprehensive report. Many credit cards give you regular reports on your FICO score, such as Discover’s FICO Scorecardservice that doesn’t affect your credit. Make sure you check it and know what your score means. If your credit score is less than 630, that is considered a poor credit rating. 

Establish a Budget Range

Your car shopping will be chaotic and potentially very disappointing if you don’t have a set budget range to stay within. We say budget range instead of just a number because of how much vehicle price tags can vary. Set an easily attainable payment amount, and then calculate what is 10 percent higher and 10 percent lower. Then, use a loan calculatorto add up the total price tag of the car before taxes and insurance.

What to Expect: Interest Rate

If you have bad credit, your loan interest rate will probably be on the higher end. Expect between 14 and 18 percent, but the exact amount depends on which lender you end up choosing and the other terms of the loan. 

Finance with The Dealership

It’s much easier to convince a dealership to see you as a person seeking a loan instead of just a walking credit score. If you’re finding that you won’t qualify for financing with a traditional bank, it’s time to look for dealerships that can do much more to help you. We at Highline Automotive are passionate about getting you financing that fits with your income, debts, and other expenses. Once we determine what you can afford, our experienced finance team will help you find the perfect used vehicle from our large  selection of models, and we make sure you get an affordable financing plan that’s well within your budget.

Save For A Larger Down Payment

In order to avoid taking out a higher loan, save for a larger down payment after establishing your budget. The more you can put down on a car, the less you need to borrow in order to fully finance the car. For example, a borrower with bad credit is more likely to get a loan with better terms on a $2,500 loan instead of a $5,000 loan. This method of borrowing is especially effective for those who are bouncing back from bankruptcy or a messy divorce.

Ask Someone You Trust to Be Your Co-Signer

We get it; it can be tricky to ask someone you know to borrow money in order to buy a vehicle. Asking a family member or friend to co-sign your loan can also be a big favor to ask but will show that you’re serious about getting a vehicle and making better decisions about your financing. Having a co-signerwith good credit is one of the most effective ways of lowering your interest rate so you pay less in the long run. 

Get Pre-Approved Before Looking at Cars

Before you start checking out the online inventory of dealerships in your area, save yourself the hassle by getting a pre-approvalfor financing. Reputable dealerships will offer this and a well maintained online inventoryso you can see what vehicles they currently have and getting pre-approved means you can shop with confidence. 

Look for Buy Here, Pay Here Options

Buy Here, Pay Here dealerships handle financing in-house. This means that a finance expert will assist customers with financing without having to go through a traditional financial institution. At Highline Automotive, even with a low credit score, we have financing optionsto fit most financial situations. 

Know When You Should Negotiate

So you are getting ready to sign the paperwork and get the keys. You have just about everything set up. Now it’s time to review everything one last time. Perhaps you see a policy changed from what you discussed, or something else that’s off. Just because you have low credit, that doesn’t mean you need to accept terms that contradict what you were informed of or are not in your best interest. Remember that you are the dealership’s customer, and you need to advocate for yourself. If the salesperson is pushing you to sign too quickly, you have the power to walk away or ask for more time. If the vehicle and paperwork are on the up and up, a salesperson won’t balk at you asking for more time to review everything. 

Planning Your Next Car and Loan

Let’s be realistic: you might not end up getting your dream vehicle when you’re financing with bad credit. There’s only so much you may be able to borrow. If that’s the case, think of this vehicle and loan as your stepping stones to an upgrade a few years down the line. 

 

So, by following these ten suggestions you should be on your way to getting an affordable vehicle that will match your basic needs. And remember, theentire Highline team is dedicated to making sure every single customer gets the Right Car at the Right Price, with the Right Financing in Place!

 

 

 

 

 

 

 

 

 

Categories: Pre-Owned Inventory

Subscribe to Our Blog

Popular Tags

true