Trying to get a car loan is hard when your credit is terrible. Lenders aren’t willing to throw you the line because they’re afraid you won’t make your payments. Before long, it will be as if you have nowhere to go.
However, there is still a chance for you to get a car loan. Even with your bad credit, you can always find lenders that will be more than willing to give you the opportunity to turn things around.
Getting a bad credit car loan
To get a car finance company to accept you, you need to know where to look for it. You also need to know what to do, and what you shouldn’t do when it comes to applying for a car loan. To help you keep better track of what you can and can’t do, here are a few tips on how you can secure a bad credit car loan.
Find a regular source of income
When you don’t have a steady source of income, lenders become weary. That’s because this indicates that you won’t have the means to pay back the loan, as well as any interest.
Before applying for car loans, make it a point to find a place of work. Even then, you have to make sure that the salary you get will be enough to pay for your expenses plus the car loan. As this will be a deciding factor for lenders.
Manage your current finances
Getting a job is only half the battle. Now it’s time to manage your current finances. That means paying off any outstanding debt.
This is also the perfect opportunity to bulk up your savings. Having enough in your savings account can help you get out of a bind. Whether it’s paying for your car loan or making sudden payments.
After paying off your old debts and putting enough money in your savings, then you’re ready to look for car loan providers.
There is no shortage of people offering car loans. But each one offers their product differently. Stay vigilant, and check the terms and conditions of each loan.
Most information is available through the lenders’ websites, but you can also ask friends and family who have made successful applications for car loans. Doing so will allow you to get a better idea on what to expect and what companies to avoid.
Bring a friend and consider a co-signer for the car loan
While shopping around and asking lenders about their terms, it helps to bring a friend. Your friend can listen in on your talk with the lender, and they can tell you if something is off.
You can also ask them to co-sign the car loan with you. However, you should know that your friend will need to pick up the slack in case you fail to make the payment.
Don’t let your friends clean up your mess, and make the payments as needed.
Consider the add-ons
Most car loans offer add-ons like extended warranties. Before getting it, make sure that your budget can cover it.
But you should know that having the extra insurance is a great assurance for yourself whenever you step inside the vehicle.
Don’t apply for different lenders at the same time
When shopping around, don’t apply to different companies at the same time. With each application, lenders will take a peek at your credit file. Lenders see it as reckless on your part, and they will immediately decline your application.
Instead, apply one at a time. Wait for the results before making another application.
Be honest about your credit history
“Honesty is the best policy” When you’re applying for your car loan, be upfront about your credit score. Be honest about how you managed to get a bad credit score, and how you plan to improve it.
This shows them that you are trustworthy and that you are ready to take on the responsibility. Another reason to tell lenders the truth is because lenders already know. They checked your credit file and can see that you have bad credit.
They can also see if you are making progress when it comes to paying off your other debts. So, make sure to keep at it.
Make your payments on time
Now that you are approved for a car loan and got your car, your next concern is the payments. Talk to the lenders to an agreed date of payment. Then always pay it on or before the due date.
Doing this regularly can help you rebuild your credit faster, and prevents late fees. You can then use the money for other expenses.
Once you’ve been approved for a loan and making the payments, don’t forget to take care of the vehicle. That means taking it for a tune-up, cleaning it, and parking it indoors.