Having a bad credit score should not prevent you from financing the purchase of a new vehicle. There are ways to obtain a car loan even if you don’t have a good credit score or have a very limited credit and work history. You will have to spend a little more on fees and interests if you do not have a good credit score but you can still find affordable financing for your new vehicle if you shop around and choose the right lender.
A Few Things To Do Before Applying For Financing
Check your credit score and look for ways to improve it if you can. You might be able to gain a few points by correcting a mistake on your credit report, closing a credit account you don’t use anymore or paying off a credit card with a small balance. Finding financing and qualifying for bad credit car loans with lower fees and interests will be easier if you can improve your credit score before you start shopping around.
Visit Different Local Car Dealerships
Car dealerships usually offer their own financing options or can help you secure financing via the lenders they work with. You should contact different local dealerships and ask them if they work with clients who have bad credit. Ask them what kind of financing options they offer but do not apply for a loan yet.
Compare Online Lenders
The most affordable way to secure financing for your new car with your bad credit score is probably going to be an online lender. Online lenders can usually offer very affordable financing options because they have fewer fees than companies with brick and mortar buildings. Do some research to select the most reputable online lenders and compare the rates they offer with what local car dealerships offered.
Find The Best Financing Option For Your Budget
You should compare the fees and interests offered by different lenders. You should also compare the monthly payments for these different loans and look at how quickly late fees and other penalties would accumulate if you were to miss a payment on your car loan. Ask yourself how much money you can comfortably borrow and how much you will be able to spend on a monthly basis to repay your car loan.
Consider A Credit Union Or Peer To Peer Lending
If you are not satisfied with the rates and fees offered by personal lenders, you should consider borrowing from a credit union or from an association that offers peer to peer lending. Some credit unions will turn you down if you don’t have a good credit score but others will be willing to work with you. You will have to bring pay stubs and might also need to submit a letter from your employer. It will be easier to obtain a car loan if you can apply for a secure loan by using equity and assets you own.
Applying for a car loan via an online personal lender is probably going to be the most affordable way to borrow money and the easiest way to qualify for a loan. You should compare your different options and look into borrowing from a local credit union or from a local peer to peer lending network if you can get an interesting rate. Look into improving your credit score, getting a co-signer for your loan or using an asset to secure your loan. Take the time to compare all your options, ask yourself how much you can afford to spend on loan payments and don’t borrow money until you have carefully read the terms of a loan.