Don't give up if you were turned down for a car loan because of your credit score. Even if your credit isn't great, you may still be able to get a loan, but you may need to take a few extra steps.
Lenders consider you a risk if your credit score is below 620, which puts you in the subprime loan category. This doesn't mean you can't get a car loan, but you should know that the APR for these loans is usually pretty high. Use these tips to help you get the best APR possible:
- Know how good your credit is
You should always know your credit score so you can be ready for what lenders may say. This will also stop dishonest lenders and dealers from saying your score is lower than it really is.
- Don't buy yet.
Many people don't see having a car as a matter of life or death. If you can wait a few months and improve your credit score, you might be able to get a lower APR. This could save you thousands of dollars. Your credit score is a snapshot of your credit, so if you make a few changes, it can go up a lot in a short amount of time.
- Get money first.
Many lenders focus on giving loans to people with bad credit and are willing to do so. Our recommended online lenders can help you with this and may even approve you for a certain amount before you go car shopping. This makes sure you can get a car loan and keeps you from having to haggle with the dealer over high APRs.
- Improve your chances
Even if you have bad credit, there are a few things you can do to improve your chances of getting a car loan. Helpful is having a job for more than 6 months. Lenders like to see stability, so having a stable job is seen as a lower risk than being self-employed. Pay down your debts and credit card balances before you apply. Negotiate with your creditors to get charge-offs, late payments, and other bad things removed from your credit report. Put down more money for the car.
- Compare prices
Don't be tempted to take the first job offer you get just because you're afraid no one else will like you. Even so, you should still look around for the best deal. Some dealers will be more willing than others to give you a chance.
Remember that even if you can't get a good APR on your car loan right now, if you pay your bills on time and pay down your debt, you will probably be able to refinance at a lower APR in about 6 months.
