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Facing frequent rejections due to your bad credit history? Do you believe that low interest rates are reserved only for those with good credit? Do you think that buying a car is a distant dream for you?
Well, this information can provide you relief and increase your chances of getting an affordable auto loan to a great extent. Last month Reuters published an article titled, “Car lenders ease loan standards and terms to boost loans”. It mentions that lenders consider car loans as safer when compared to mortgage and credit card loans. Moreover, lenders are now offering generous loan terms due to weak credit demand. Experian, one of the credit bureaus, noted that the percentage of new car loans offered to sub-prime borrowers rose 11.4% in the quarter compared to last year. This means that even people with bad credit can buy a new car without any hassle.
So, getting a bad credit car loan has become possible today. There cannot be a better time than now to buy the car of your choice. But, are you still unsure about getting an affordable car loan? If you are still in doubt, use these strategies and not only get instant approval on your bad credit car loan but also avail the lowest possible rates.
preparation is key
Buying a car is a big decision as you spend your life savings on it. It is a commitment to make regular payments. You cannot approach a dealer without doing a thorough research. So, before buying a car or applying for an auto loan, here are some important things you need to take note of.
clean up your finances first
Whenever you want to buy a car, do not take a decision in haste. You should sign on the dotted line only if you are sure of what you are doing. There have been instances where lenders have duped innocent borrowers by pretending to have a bad credit score.
It is always important to study your credit report before visiting the lender’s office. You can get a free annual copy of your credit report from AnnualCreditReport.com. Study all entries and dispute any unwanted transactions and errors. It is a known fact that credit bureaus make mistakes while calculating your credit score. You can improve your credit by removing all the errors. Also, start paying off your loans. Even if you can pay off some of your loans, it will have a positive effect on your credit score. All this takes time and that is why you should plan your car purchase comprehensively and avoid taking decisions in haste.
down payment to down your rates
The initial upfront amount you pay to buy a car can be a useful way of reducing interest rates. Making a substantial down payment of ten to twenty percent can reduce your loan amount and thus reduce the lender’s risk. Also, the lender will be assured of your financial stability. This will definitely reduce the cost of your car loan.
Co-signer – a pleasant idea for the lender
When you have someone co-signing on your car loan contract, the lender is assured of its money. This is because he can get it from the co-signer if you miss the payment. Finding a co-signer is a bit difficult but if you can manage a co-signer, it will work wonders for your car loan.
If you cannot find a co-signer, you can avail auto loan without co-signer, which comes with slightly higher interest rates. Nevertheless, it is important that you exhaust all your options before opting for a co-signer car loan.
Online Bad Credit Car Loans – A Better Option
An online bad credit car loan offers you the option of availing an auto loan without stepping out of your home. You can apply by logging into your computer. Online car financing companies are a perfect option as banks do not entertain people with bad credit. To get money from a credit union, you must be a member of it. When you apply for a car loan from an online auto financing company, you have the option of comparing multiple auto loan quotes. This is not possible when you avail dealership financing.
Plus, online auto financing companies work with many sub-prime lenders, making it easy for them to process your auto loan application. This greatly improves your chances of getting a low interest bad credit auto loan.
How to choose your Bad Credit Car Loan?
Choosing a bad credit car loan is easy if you read the vehicle loan agreement carefully. It is imperative that you don’t just focus on low interest rates, but instead look at the bigger picture. Calculate the Annual Percentage Ratio (APR) which will tell you the interest rate for the entire year instead of the typical monthly rate. It also considers loan origination fee and other miscellaneous expenses which will give you a better idea of the cost of the car loan.
Check for any pre-payment penalty as it can add up to your expenses significantly if you decide to prepay your loan. Make sure the lender is a reputable name in the auto financing industry.
A little due diligence can help you get the best auto loan option. Bad credit is never a problem if you know how to deal with it. These strategies and important pointers will help you get easy approval on your car loan application.
Remember bad credit is just your history; Writing your future is in your hands. Get out there and turn your car dreams into reality!
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