Having bad and poor credit score is an enormous stumbling block that can prevent you from approaching a bank or getting a good loan to finance your car payment. Bad credit car loan means a big pain because you are often taken as a high-risk customer. It is a struggle to gain trust from banking officials when they think you might default in your regular payments of car loan. According to standard lending guidelines, the major factors that affect your credit score are: lack of knowledge and experience, poor financial advice, sudden loss of employment, pending payments and existing dues. These are considered as anti-loan nemesis factors that can leave even a clean person extremely needy for a bad credit car loan. These all can weaken your financial profile and put you in the pit of bad credit.
Poor credit history doesn’t necessarily reflect your character, profile imperfection, dubious work ethics or even abysmal financial choices. But that is not to say bank representatives or lenders won’t consider it. In fact, it is the only legal way to determine if you deserve an auto loan with normal subprime interest rates. Although it is an arduous process, getting car finance with bad credit is not next to impossible. This is why the tips mentioned here for securing traditional car loans will help you get it on your own.
So if you are reading this, it probably means you really need a car loan but your credit score isn’t that appealing. However, there is always a hope and the following ideas will help you get a car loan approved even in bad credit scenario, provided you continue to make efforts to increase your credit score. Here is what you need to imbibe:
#1. Don’t shun visiting or trusting bank services
Believing that you won’t be seen as a regularly paying customer is a fear that will prevent you from going to bank to discuss the chance of getting an auto loan approved. Car finance with bad credit is not an easy go. But sometimes what lenders seek, apart from your clean credit history, is your ability to make uninterrupted payment attempts. Bad credit might be a matter of opinion or a theory of relative comparison. Despite the fact that your score is an ultimate criteria to judge, there are lenders who prefer to look for a good prospect instead of high-risk scenario.
#2. Borrow some credit from your near ones
It is not an abnormal situation that you don’t have any family member or a close friend who will directly lend you some cash. However, what adds credit to your approach is borrowing some credit from someone with good financial reputation. In a simple terms, you can ask someone with clean credit history to be your reference co-signer when applying for the loan. A person who knows you and your profile very well can be your benefactor in getting a bad credit car loan in a few attempts. One thing to strictly bear in your mind is that if you default in your monthly payments, your co-signer will compromise their credit and they will be obliged to repay the debt.
#3. Apply Shop-around logic
Not all lenders plague you with a saddening negative statements about your inability to get car finance with bad credit. Some of them do have a good intentions at heart and see you through the entire spectrum of your profile. They will see your financial picture in a more positive light and will not judge you in a moment of analysis. This is why you must get your best chance by shopping around. But do not fall for lenders who favors subprime consumers since it involves high risks and warning signs.
#4. Choose a path of Pre-approved loans
With bad credit, even if you get a car loan after a lot of desperate attempts, you will perhaps have to pay a huge down payment or installments that will place extra stress on your monthly budget. The best workaround to secure a car loans with bad credit rating is to get pre-approved status from a bank or lender before dealing with a car dealer. This helps you avoid the hassle of hard negotiation with dealers so that you don’t have to discuss financial details much with them and can simply request their favorite car at normal price.
This also means that you get absolute redemption from down payment, and that they will have little chance for dealers to slip additional profit on the car loan.
#5. Engage a reliable financial adviser or consultant
Considering that your loan has got disapproved by bank lender or that there is big chance you won’t get positive response, before applying to any financial institution for bad credit car loan it is advisable to consult an expert in the matter. Have a detailed clear conversation with a reliable financial adviser or consultant and draw most practicable advices since they are the most learned and experienced individuals in this. Their expertise will keep you confident and bring you in a positive light for lender who can give you car loans with bad credit ratings.
#6. Getting credit based on home equity
If you have a property with good equity, it is possible for you to win low-interest credit with tax deducted. This way your home equity can give you added advantage of being eligible for bad credit car loan. Though the risk is, you will jeopardize your home equity if you fail to repay the loan amount in time or at all. Make sure you have resources enough to live your promise of regular payments. You should have reliable income and believe in a discipline of dutifully paying the debt. Independent of your actual credit score, it is a savior of an option that is sure affordable, thinkable and implementable.
#7 Apply to credit unions with confidence
There is another arrangement to improve your chances of getting reliable car finance with bad credit. It is called Credit Unions. They are nothing but parallel replica of banking system with the only difference that they are owned by the bank members. They share common elements like same geographic location or same industry. Credit unions are non-profit organizations that lend money to customers with low charges and high quality customer service. You can get access to such unions through online search results matching your nearby locations. While discussing personal loan conditions, always compare loans from several other financial institutions before final signed documentation so that you can make sure you are getting the lowest interest rates.