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Bad Credit Car Loans
A bad credit car loan might sound like an oxymoron at first, but indeed it is becoming more possible than ever for borrowers with bad or sub-prime credit (as it is often called) to qualify for certain types of auto loans. Typically these loans are going to come at the expense of steeper interest rates compared to those given to borrowers who have good credit standing, but with some careful strategizing, borrowers with sub-prime credit can shave down the added expenses of their auto loan.
Know your credit score – It used to be that only potential lenders had access to your credit score, but no longer. Now you can access your own credit score at any time you wish, often online. By knowing exactly where you stand in regards to your credit, you will be better prepared to choose the right lender for your situation.
Never finance through the dealership – Car salesmen make money off the financing deals they close. This means that you will almost always be paying added “middle-man” costs on your auto loan by going through dealer rather than a third-party lender. If you have bad credit, you should already be wary of loans that are going to cost you a single cent extra. Research third-party lenders first—especially those who cater to borrowers with bad credit.
Shop Around – This is a no-brainer. You don’t want your bad credit getting any worse, so you need a loan option you know you can afford. Many lenders market their businesses to borrowers of certain credit tiers; do some research to find out which lenders market themselves to borrowers of your credit tier, and let those names be the initial pool of potential lenders you work from. Always consult your bank: many have departments specializing in loans for borrowers with poor credit, and are willing to work with clients they have existing business relationships with, i.e. checking or savings accounts. Go where you know. Finally, more and more credit unions are beginning to open up their businesses to borrowers with poor credit, so don’t count them out as a possibility either.
In the end, your credit standing is entirely dependent on you. If you are having serious difficulty in obtaining an auto loan because of your poor credit standing, then take the time to pull yourself up to a more favorable credit tier. Remember: your credit score isn’t set in stone. Every little step you take toward paying off debt reflects favorably on you when lenders are reviewing your credit history. If you bite the bullet and sustain an earnest effort to alleviate your debt over the course of several years, you won’t have to worry about obtaining a bad credit car loan. You’ll be in position to get the good credit loan you never thought you’d see.
Topics: Auto Loans |
