Hey, even if you’ve had some financial problems in the past and have bad credit, that doesn’t mean that you don’t need a car loan, but getting auto loans with bad credit can be something of a challenge. There are several things you can do to make the process a little smoother and one of them is to try and start the process early. The fact of the matter is that if you have credit problems it will generally take time to find a lender who is willing to work with you, they are out there but it might take some searching to find them.
Of course, if possible hold off on getting your auto loan for a while until you can get your credit score up a little bit. Sometimes it can be done in as little as a few months. Not every one can wait, but if you can it might well be worth your while since it will be easier to get a loan with good credit and you will get a lower interest rate.
Here are some specific steps you can take to increase your chances of getting a loan if your credit is less than great;
1. First things first, if your credit is bad you will pay more for any loan you do get… period. If the current loan rates are around 5% you should expect to pay at least 12% or higher. It’s not uncommon to have to pay upwards of 25%. The higher the interest rate is the less car you can afford because more of your monthly payment will be going just to the interest portion of your payment.
2. Be willing to do some research, both online and off. Even with bad credit you can find differences from one place to another in the amount of interest they will charge you. Spending time trying to find the best deal, even though it may not necessarily be a ‘good’ deal, will ensure that you get the lowest interest rate possible.
3. With the current recession more and more dealers will help their customers find financing, even those with challenged credit.
4. It is possible to refinance a car loan so even if your interest rate is ridiculously high, you may be able to finance it in 6 – 12 months if you’ve been making all your payments on time.
5. The more money you can use for a down payment the more likelihood you’ll have of being approved. It just creates a higher level of confidence that you are solvent and will be able to pay your payments.
Even if you’ve had some financial challenges in the past, don’t think that that means you can’t get a new, or newer car. There are many places that offer to give auto loans with bad credit, it may just take some time to find them. Be willing to be patient, be willing to understand that you will pay more in the beginning and be willing to put some money down, all of these will increase your odds.