Having a car became more than a luxury, a need. It is understandable you need a car in today’s world and how huge the investment is and this can get more difficult when you are dealing with bad credit right now.
Fortunately, there are ways to get a car loan without a good credit history, Loan Cheetah experts found a solution to this and they will explain to us, not only how to get that car loan, but also some tips to start working on improving your credit score.
About your Credit Score
Your credit score is a summary of your credit history, it is like a guide for lenders to decide whether to lend you money or not. Typically, most lenders do not accept dealing with borrowers with a low score (below 600), but actually, some of them are willing to give a hand to those with bad credit but apply more interest rates.
This is understandable since according to your credit score, lenders have a perspective of you at the time of repaying the loan.
The good news is that you can always improve your credit score, you can do this by:
- Paying your bills on time: You can boost your credit just by paying your bills on their due dates!
- Paying down your credit cards: Credit utilization is an aspect to consider on your credit score, it accounts for 30%. How much of your available credit you are using and if you are paying it on time will help you increase your credit score.
- Checking your credit profile: It is normal to make mistakes, that’s why it is important to also check for errors on your credit profile, like payments you did on time but they took time to be reported or fraudulent accounts signed with your name.
Save for a down payment
This is key if you are thinking about getting a car loan, by putting down for a car you are getting more chances for a lender to approve your financing.
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It’s a smart thing to do since it will also lower your interest rates, especially if you can put in more money, some car sellers recommend a down payment of 20% of the car’s price. However, the more money you put down, the less monthly payment you will need to pay for your loan.
Prove you can afford it
Lenders want to be sure you can afford the loan, there are many ways to do this. Borrowers may check if you are a current employee and if you have a real address, these factors show that you may be economically stable, and also they are proof you need to provide when signing for a loan.
Ask a co-signer to apply for you
When having bad credit you can always ask someone to apply for you, a person who trusts you is willing to help you, and for sure has the required income and good credit score to apply for a loan. Be aware that the loan will be attached to that person’s credit score, so you must be able to make your monthly payments on time to avoid putting in risk their score.
Getting a car loan with bad credit requires more effort but it is still possible, it might also be a slower process so be patient. Focus on starting to get a better credit score by paying your bills on time, registering whether there were mistakes on your credit cards, and benefiting your credit profile.
Your credit score may show a different thing from your current situation, you may be doing better and having a better salary or savings that will help you to ask for the loan. As another resource, you always can ask someone to do a great favor for you and sign for your application.