People with bad credit who want to buy a car may wonder how they can get approved. The answer is bad credit car loans. When looking for a bad credit car loan, you shouldn't just ask, "How do I get approved?" Better to ask, "How do I get approved for the best auto financing for people with bad credit?"
Sub prime auto financing is for people who want to buy a car but have a credit score of less than 620, a history of late payments, or a recent bankruptcy. But not all subprime loans are the same, and a smart shopper will do some research before heading to the car lots.
Getting your own credit report is a good place to start when you want to buy something big with credit. A buyer wants to know as much about his credit history as a potential lender does. Check your credit report for mistakes and let the agencies know if you find any.
Being honest about how much a buyer can spend on a car can also help them get a subprime auto loan. This purchase is the first step toward fixing credit that isn't great, so the buyer may have to buy the best car for their budget instead of their dream car.
The biggest down payment possible will help the buyer find subprime financing even more. The interest rate on a loan may also go down if you make a down payment. Most of the time, a lower interest rate also means a lower monthly payment.
Shopping is needed to find the right subprime auto financing, just like shopping is needed to find the right car. A car dealer makes some of his money by helping people get loans for cars. So, a car loan taken out on the lot with the dealer might cost more than one that the buyer sets up ahead of time. Even a person with bad credit who wants an auto loan may be able to get pre-approved for one. When a buyer goes to the car lot with a loan in hand, they have more power to negotiate the price of the car.
Where can a person with bad credit look for an auto loan?
- Use references to find lenders. Check with the Better Business Bureau, use the yellow pages, and ask friends for references.
- Banks and credit unions with which you already have a relationship - Many banks will help a customer with a current account rebuild their credit, especially if they also have a savings account. Some credit unions are also making it easier for people with bad credit to get loans. If the applicant has direct deposit and will let payments be set up as regular debits, this is also a good sign.
- Look on the Internet. Don't give out your credit information to anyone who asks for it online. This goes for anyone who tries to get business over the phone or through the mail. Before giving a company sensitive information, you should always find out more about it.
Once a buyer has found a few lenders, they should sit down with them and tell them the truth. Many people need subprime auto financing, and they shouldn't let themselves be pressured or scared because they are embarrassed about their credit histories. Get all offers in writing and take the time to read and compare them carefully.
Lastly, remember that getting credit is a process that never ends. Paying on time for a subprime auto loan can be the first step toward fixing a bad credit history.
