Having bad credit to your name has a lot of consequences, especially on your finances. Consider it as something like a red mark against you, as it makes look unappealing as a borrower to lenders. They have a good reason to hesitate, though: having a bad credit gives lenders an impression that you might not be able to pay on time
Bad credit also hurts your chances of investing in things that may help with your financial recovery, including a car. For most people, having a car helps them get to wherever they need to be. Others may even use it as a source of income. A car loan is going to be important in this scenario, but this will depend on finding car dealers for bad credit.
Make a Plan
The first thing you have to do is to determine your current financial capability. True, you may have had bad credit, but perhaps the tides have turned and you now have a more stable source of income. Compute for the cost of the car you are intending to get, how much loan you will have to take out for it, and how much of it you can afford based on your current income.
You may or may not get the chance to present your number-crunching skills to your preferred lender, but at least you have the data ready should they suddenly ask for it. Coming into that lending meeting, you have to show confidence that you can afford this loan at this point in time, regardless of that bad credit hovering over your head.
Prioritize Loan Terms
People tend to look at the monthly payments when shopping around for loans. However, what they don’t realize is that the loan terms are what they should be looking at instead. Go for a car loan that carries the lowest annual percentage rate and within the shortest period of time.
It may seem overwhelming to you at first, but if you consider the long-term, you should be able to finish paying it off sooner. Lower monthly payment rates usually mean longer pay periods. If you sum it up, it’s most likely going to cost you more in the long run.
Improve Credit Rating
Work to improve your credit rating by clearing smaller debts or getting a more stable job for a steady stream of income. These variables will matter in your efforts at changing your credit rating from bad to good, and will also be taken into consideration by the lender.
Even though your rating is currently filed under Bad, if lenders such as Dick’s Auto Loans see that there have been improvements recently, then you can enjoy a slightly lower interest rate for your loan than if your rating was just plain bad.
Bad Credit Car Loans – 9 Steps to Getting a Car Loan. Bankrate.
How to Get a Car Loan with Bad Credit. QuickandDirtyTips.com.