If you’re in need of a new vehicle but don’t have the credit to buy one, you may be enticed by those signs that advertise loans for people with bad credit. Don’t be so easily fooled. Dealerships that deal strictly in bad credit car loans typically make their money on defaults, which occur often because of the impossible rates and terms. That said, you still have options. If you want to get a car loan on bad credit, here’s what you need to do:
Save Up for a Down Payment
A bigger down payment means a smaller loan, and a smaller loan means more credible options. Many lenders are more willing to lend to people with so-so credit if the loan is not for much. Furthermore, by showing up with a larger down payment, you show the dealer that you’re responsible and capable of managing your money to some extent.
Several credit agencies preapprove consumers via a simple online application. Preapproval is fairly easy to obtain through these agencies but can go a long way toward boosting your credibility. Even if a dealer doesn’t accept the preapproval offer, it can give you an idea of what rates to expect and therefore, put you in a better bargaining. Position.
Boost Your Credit
If you are in the “thinking about buying a car” stage, take time to boost your credit. Pay off old debts, don’t rack up new debt and dispute credit errors. The cleaner your credit record when it comes time to shop, the easier it will be for you to obtain a car loan.
Avoid Additional Bad Credit Items
Don’t forego your rent one month and your phone bill the next in order to save up a bigger down payment. Any additional bad items on an already bad credit report can severely hurt your chances of getting a good loan from a reputable lender.
Bad credit car loans are out, but you just have to know how to shop for them. Be smart in the way you shop to find a loan that is right for you.