Having a bad credit isn’t the end of the road for car buyers. There are lenders and dealerships that can help you with financing your car. Even if you have a history of making late payments or even if your credit card is already maxed out, lenders will still consider you for a loan. This is because cars are seen as a good investment. It offers value that lenders can reclaim should you fail to make payments, acting as collateral. Lenders also believe that car buyers tend to keep up with the payments to avoid losing the vehicle.
Given all these, you still have a chance to get that car you’re eyeing at the dealership. There are ways to ensure that you get approval for car loans for bad credit.
Prepare Ahead of Time
Chances are you’ve been planning to buy a car for quite some time already. This means that you have enough time to start preparing for it the same way you would when you’re making a major purchase.
Before going to a dealership and making a purchasing decision, start with your credit report first. Give yourself three months to work on outstanding negative items that may harm your chances of getting a loan. These items are called risk factors, which often include old debt and fines. You shouldn’t ignore these. In fact, fixing them one by one will help improve your credit report.
Get Pre-Approval and Find a Good Dealer
High interest rates are mostly applied to loan applicants with bad credit. However, you shouldn’t settle for the first offer you get since there are some rates that may work for you better. You should seek pre-approval from more than one lender so that you can choose the one that best fit your needs and situation.
You can also find a dealer that can finance buyers with poor credit rating. There are ads for these everywhere, so pay close attention to those offering a good deal.
It’s important to establish your credibility when talking to a dealership about financing. When you meet with them, bring paperworks and documents such as your recent payslip, utility bill, driver’s license, and at least three personal references. These will help the dealership know you better, creating an impression that they can trust you.
These tips can guide you in getting bad credit car loans. Just remember to keep up with the payment schedule to improve your credit rating and avoid making your record worse.
Buying a New Car When You Have Bad Credit, Edmunds.com
9 steps to a car loan on damaged credit, Bankrate.com