Do you need some tips for getting an auto loan with bad credit? You are not alone! “Some estimates show that 25 percent of American adults are saddled with bad credit,” says the website DMV.org. “Yet, thousands of these individuals manage to get car loans every day.”
There are some things that can help you be one of those thousands that successfully obtain a car loan. We want to help you with that quest. Below are some tips for getting an auto loan with bad credit:
- Know your score. Do not assume that your credit score is bad if you have not seen it yourself. You can get your credit report free at AnnualCreditReport.com, or by calling them at 1-877-322-8228. Federal law assures that you can get a copy of each of the three major reports once a year at no charge.
- Be realistic. You can probably get financed, but most likely it will not be for a $50,000 brand new car! You need to be open to looking at late model used vehicles, or less expensive new cars. We want to help, the lenders want to help, but your expectations should be tempered with reality!
- Look for the right dealership and lender. Many dealers have close relationships with lenders who are happy to work with those trying to get an auto loan with bad credit. Others do not want to take the time to try to help. Be sure to choose wisely. It is an easy choice – choose us!
- Think terms, not just payment. Everyone wants to keep their payment as low as possible, but be careful with that. You need to know what interest rate you are paying, and for how long. It may be worth paying a few dollars more a month if you pay the vehicle off quicker and save more money in the long run. With bad credit, you will naturally have to pay a higher interest rate, but be sure you understand all of the terms. The lowest payment is not necessarily the best deal.
- Be prepared when shopping. There are certain things that you will need when applying for an auto loan with bad credit. Nearly all lenders require Proof of Income, such as recent paystubs or possibly bank statements, and Proof of Residence, such as a current utility bill with your name and address. Of course, you need your driver’s license, and in some cases, you will need other documents. Check with the dealership to be sure. You can also save time by applying online in many cases.
- Consider a down payment and/or co-signer. While this is not always necessary, having a good down payment will substantially increase your odds of getting financed. Generally speaking, more is better, but even a smaller amount can help. Also, having a co-signer with good credit, while not a necessity in many cases, can certainly help not only in securing an auto loan with bad credit, but may also help in getting better interest rates and terms.
- Finish up the loan before you leave. There is a term in this business known as a “yo-yo loan.” This is a practice where you are allowed to take your vehicle home, thinking that everything is done. Then, you get a call that you need to come back in because the lender did not give final approval. You may need to sign a new contract with a different interest rate or loan length, or you may be asked to come up with more money down. Be sure you understand exactly what is going on before you leave the dealership.
An Auto Loan with Bad Credit is Possible
These tips can be useful if you’re trying to get a car loan with challenged credit. These by no means guarantee an approval, but they will get you moving in right direction.
Of course, the best next step would be for you to complete our online application and take advantage of the services we can offer for you. We are here to help you, and prove that we are indeed the place Where Everybody Rides!