1. Finance

This is how you can get a car loan with bad credit

08/30/2018 18:08

Poor credit is the last thing that anyone would want. Bad credit brings with it heaps of problems and the consequences might ruin your financial life. You cannot get loans, lenders don’t like you anymore, and there isn’t much you can do about it except fixing your bad credit.

So what you should do when you have bad credit and you’re trying to fix it? What if you need a car loan with bad credit? Can you still get it?

Anyone with average or above average credit score can get any type of auto loans but those with a bad score generally struggle. If you’re trying to get a car loan and have bad credit score, read on.

 

1. Do your homework

When was the last time you checked your credit score? Statistics show that as much as 43% of people don’t know their credit score. You can get a free copy of your credit report every 12 months, here is how you can get a copy of your credit report from three reporting companies.

Once you have your credit report, see what you can afford. You can use a car payment calculator to figure out monthly payments based on your down payment and how much you'll pay for the car in total.

When you know your current credit score, you’re in a better position to set your expectations and you get a hint of what to expect from the lenders. For instance, lenders ask for a certain minimum down payment if you have bad credit.

So you should know where you’re coming from.

 

2. Find suitable lenders

Your biggest challenge is finding lenders that accept applications from people with bad credit. I have to admit that it is challenging but possible. You can look for banks, auto dealers, credit unions, and finance companies.

At the end of the day, you might end up with several suitable lenders which is great, but you have to analyze and compare all the lenders. You don’t want to go with a lender that will exploit the deal because of your poor credit score. And trust me, it happens a lot.

Look for lenders that don’t charge you exceptionally high markup and are reasonable. Don’t let your poor credit score sign you a deal that isn’t fair.

Remember, you’re not the only person on this planet withbad credit score.

 

3. Co-borrow

What if you don’t find a lender?

Well, you can go with a co-borrower. A co-borrower or co-signer is someone whose credit score is used to qualify for a loan. A co-borrower will make your life easier and it will help you get an auto loan instantly.

The challenge is finding a co-borrower with a decent credit score. There must be someone in your social circle who will be ready to become a co-borrower.

 

Final words

Getting approved for an auto loan with poor credit score gets a whole lot easier if you know the ins and outs of the game. If you’re smart, you can get a loan easily.

Let’s get cracking.

 

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