Do you have less than perfect credit? You’re not alone, especially these days. In fact, research shows that as many as 25 percent of all Americans are burdened with less than perfect credit. Even so, many of these people still manage to secure an auto loan if they need one. How do they pull it off? More importantly, how can you pull it off? It’s easier than you think. If you can acknowledge a few key realizations and follow some important steps, you can get a car loan no matter what your current credit status.
Know Your Expectations
Even though you can get a car loan in spite of your poor credit, it’s very likely that you’ll pay more in order to get it through the cost of higher interest rates. Usually, if your credit score is under 620, then you won’t get the best loan offers and you’re also considered a sub-prime borrower.
If you have less than stellar credit, it’s a good idea to be realistic regarding the car you’re hoping to buy. In fact, choosing a more expensive auto that’s above your financial means is going to make it even harder to obtain a loan. This is why you need to be realistic and think practical when trying to obtain an auto loan with poor credit. You’ll be better prepared to get the loan if you face the truth about your credit situation. On the bright side, you can buy your dream car once your credit rating is restored and your financial situation is somewhat improved.
Keep an Eye on Your Credit Score
Once you’ve faced reality about getting a loan in terms of paying more in general, begin the loan process by getting a copy of your credit report. Even in this day and age, credit-reporting agencies still make mistakes that can seriously jeopardize or even destroy a person’s credit ratings. Even small mistakes can lower your rating back down into a lower category that can potentially affect the terms surrounding a loan.
Therefore, if your credit is already poor, ensure that it isn’t getting even more damage by containing the wrong information. Review your credit report for any inaccuracies or mistakes and immediately get them corrected before you even think about applying for a car loan. In the end, this could save you hundreds of dollars. It’s simple and easy to get your credit report.
Understand Your Credit Report
If you have poor credit, it’s particularly important to understand your credit score since it’s one of the main ways that financial lenders gauge whether or not they’ll approve you for a loan. Also, it plays a key role in determining the interest rate of your loan.
Knowing where you stand with your credit will give you more confidence before you apply for a car loan. It could be that you’re not too far off from a more desirable category that will enable you to qualify for a better rate. In such a case, it’s much better to simply wait to apply for your car loan until you actually reach that particular point.
Do Your Homework and Shop Around
Even though it’s likely that several financial institutions will readily offer you a car loan in spite of your poor credit, you’ll have to shop around to find which one will give you the best deal. Don’t just depend on the dealer to get the financing on your behalf since this will likely be more expensive. Car dealers not only want you to buy a car from them, but they also want to reap the benefits in terms of making a profit through financing the car for you. Branch out on your own first, and then choose the ideal car based on those figures. Unless it’s the best you can do, try and avoid dealer financing if possible.
Sometimes is pays to check out your local credit union, especially if you already have an account with them since their rates are usually better. Remember to secure your financing first before you walk through the showroom or car lot.