To purchase a car with poor credit might feel impossible. Don’t let that feeling fool you. It can be a challenge at times, but it’s not even close to being improbable. In fact, with many people trapped with bad credit, it’s more common than you think to be approved of bad credit car loans. By no means should your credit history determine whether or not you have reliable transportation. Here are three tips to remember when considering a car loan.
There are many dealerships and lenders that offer car loans to people with poor credit scores. You never have to settle for the first one that you come across. The best course of action is to look around and compare rates. You should find out which lender will offer you the best rate at the lowest interest. Dealerships don’t look at every client with bad credit the same way. Some may consider one score to be less optimal than another and may have different terms and conditions. Always take a look at your options.
Look at Loan Terms
It may be appealing to go for a loan that has a lower rate over a longer time period. This can lead to you paying more money than you would have if it’s a loan that has a higher rate over a shorter span of time. Make sure that you are looking at the loan as a whole, rather than just the monthly payments.
When it comes to credit scores, bad credit isn’t always what it seems in auto loans. In fact, what would be considered bad credit for a mortgage may actually be adequate for a vehicle. If you have bad credit, keep this in mind. If you apply for a loan for someone with poor credit, you may get worse terms than if you tried for a better loan.
If you don’t have the on-hand cash to buy your next used car outright, or if you simply don’t prefer to do this, securing a loan is a great option. Car loans enable buyers to pay off their vehicles over a designated time frame a with monthly payments at a given interest rate. As with any loan, it’s vital to keep current with car loans in order to protect your credit and to avoid losing your vehicle. Here are some tips to ensuring you can pay off your loan.
Make Payment on Time
When you finalize your car loan, a specific date will be set when your payment will be due. It’s critical to never miss this deadline. Missed payments will not only result in late fees but can cause more serious problems like damaged credit or even repossession of the car. Get in the habit of paying on time no matter what. A good piece of advice is to set up automatic withdrawals from your bank account.
Put Some Money Down
At the time of the purchase, you may be required to put a certain amount of money down for the car. If possible, make a larger-than-necessary down payment. This will lower the principal and the monthly payment, thus making it more manageable.
Call For Help When You’re in Trouble
While you should never intentionally miss your payment, life happens and circumstances make it difficult or impossible to keep up with your loan. Perhaps medical bills pile up, or perhaps you have a job loss or personal tragedy. There are legitimate reasons why paying on time will not be easy. Your lender recognizes this as well. However, if this happens to you, don’t ignore the late notices or neglect the loan. Talk to your lender and explain your situation. Your lender will work out a plan to help you so that you don’t get behind and default.
Staying current on your loan is vital. Practice this tips and have the peace of mind of financial security.
As you’re looking at the perfect new car to buy and figuring out financing, it’s a good idea to think ahead about paying off your car loan. Car loans might be a part of life, but that doesn’t mean you have to spend more years than necessary paying them off. Here are a few methods you can put to good use to become the legal owner of your car ASAP.
Make Principal Payments
Depending on your lender, you might be allowed to make principal-only payments. If so, take full advantage of it. What that does is cut down on the amount of interest being applied to the total remaining loan, and you pay your loan off faster.
Pay Your Loan Twice a Month
Another good idea is to split your monthly car loan in two, making a payment twice a month. The reason this is a good idea is that you make 13 payments a year rather than 12. Not only do you pay your loan off faster, you also save money in interest.
Round Your Payments Up
When it’s time to make your car payment, round up to the nearest $50 whenever possible. You can combine this tip with the one above, splitting your payment in two and adding an extra $25 to each.
Use Extra Cheques, Bonuses and Tax Refunds
After a while, paying your car loan can become just another monthly financial obligation to take care of. This means you might forget about it when you get an extra check, your tax refund or a bonus at work. When you do get some extra cash, stop for a moment in your excitement and think about how you can best use those extra funds. While making an extra car payment might not be as exciting as a new pair of jeans or home renovations, your future self will thank you.
A few tips and some strategizing are all you need to pay off your car loan early. Be sure to put these suggestions to good use.
You know you probably need to replace your car, but your credit is not stellar. It is a mistake to assume that your low credit score is a deal breaker when it comes to financing your next vehicle, though. Auto Finance companies like ours handle bad credit car loans all the time, so don’t abandon all hope that you will be approved. All you need to do is prove that you are not as much of a credit risk as your score might indicate.
How Low is Your Credit?
Many people are unaware of their credit score. Maybe you assume that it is terrible because you had problems a few years ago. Before you come to us, get a copy of your credit report. Not only may you be pleasantly surprised at your score, but you might also discover quick ways to raise your score. Be sure to correct any mistakes on your report that you find. If you catch them in time, you can get them corrected before you need the car loan.
How Much Do You Make?
If you have bad credit, you can often offset it with proof that you have a significant amount of disposable income. Credit only shows your payment history. It does not show your present or future. Your pay stubs, however, can give us a fuller picture of your actual ability to honor the terms of the loan.
How Much Can You Put Down?
You can also increase your loan approval chances by making a large down payment. A large down payment can also help you get better terms on the car loan. This lowers the total amount you are asking to borrow, which makes you less of a credit risk to our lending partners.
Your credit history does not have to end your chances of getting the car you want. If you can prove that you can afford the vehicle, your loan application is likely to be approved.
When you need to buy a car, but your credit’s bad, you may struggle to find a loan at all, let alone one with the type of terms you can live with. However, there are some things you can do to ensure that you’ll be eligible for bad credit car loans.
Work Toward Improvements
Even though you have bad credit, you can turn it around enough to at least show some improvement. This single step may help you work out better terms than you might expect from a so-called “bad credit loan.” To complete this step, check out your current credit score. Sometimes, the reporting agencies will also provide tips on how you can improve your score. Within months, you should see some progress, and this can help you get into a better loan situation.
Don’t Rack Up Inquiries
Did you know that every time you apply for a loan, your credit score takes damage? If you head into one credit purchase after another, you’ll end up damaging your chances of getting any loans, even those that are intended for people with low credit scores. When you’re ready to shop for a car, don’t open up an account at your favorite shopping center.
Don’t Be Misled by Low Interest Rates
Loans with longer terms generally have lower interest rates. Short-term loans, on the other hand, have higher interest rates. In many cases, in spite of those higher rates, you’ll still spend less when you choose the short-term loan. If you can’t qualify for one of these loans, be sure to check about an early pay-off penalty, so that you’re free to pay off your debt as quickly as possible.
Make All Your Payments On Time
As you’re working hard to improve your credit, you may be tempted to pay more towards one loan and let other loans suffer. However, every late payment can damage your credit score. This is especially true of any mortgage payments.
As you work toward improving your credit to the point that you can get a loan for that car you need, carefully stick to good credit principles. In time, you’ll have a score to be proud of.