Bad credit? Here’s how to get a car loan

Keeping our credit in good standing is something we all strive to do. It’s important if you want to qualify for a variety of loans (be it for a home, a car, or anything else), and can even impact your ability to sign up with a utility company or get an apartment. There are a variety of free credit score reporting service available that allow you to monitor your credit, and making use of these is a great idea for savvy consumers.

However, sometimes things happen in life that are outside of our control. Maybe we have an unexpected health-related issue that causes us to rack up a mountain of medical debt. Or perhaps we experience an emergency that saps our income for a couple of months, leaving us unable to make monthly payments on other debt. Whatever the reason, there are times when external circumstances can result in a drop in our credit score.

When your credit’s bad, you might think it’s impossible to get an auto loan. However, it’s perfectly possible, as long as you educate yourself about your options and take the right approach. Take a look at our guide on how to get a car loan with bad credit to learn more.

Check your credit

First of all, take a look at your credit score ahead of time. It might not be as bad as you think. Knowing what category you fall into (poor, fair, and so on) will help you to better assess your options. There are plenty of free online options when it comes to finding out your credit score: there’s no need to pay for the service.

Don’t assume the worst

Here’s the thing: a mortgage is a huge risk for a bank. Repossessing a home is challenging, and the bank’s looking at hundreds of thousands of dollars that someone may not be able to pay back on time. On the other hand, a car is much less risky. A used car loan is often less than ten thousand dollars, and repossessing a car is comparatively simple. So, just because you have average credit doesn’t mean you won’t be able to get an auto loan.

Consider different terms

Car lots are under pressure to sell a minimum number of vehicles each month, which can work to your advantage. If you have a low credit score, the lot may be willing to work with you anyway. However, they’ll likely charge you a higher interest rate, and may extend the length of your repayment if you have low monthly cash flow. Do the math on what your total repayment will be with these terms: you may be better off buying a cheaper vehicle as you continue to build your credit, rather than opting for something more expensive that ends up costing you an arm and a leg.

Watch out for gimmicks

As a subprime borrower, some dealership may attempt to prey upon you by adding extra fees and services to your loan agreement. If anything in the contract looks fishy, walk away from the deal. There are plenty of other lenders out there that will be willing to work with you.

If all of this sounds like too much work for you, then go ahead and give Junk Car Traders a call.  We can provide great quotes and can pay thousands in cash. In Colorado we can tow anywhere and pay cash. 

References

http://www.bankrate.com/loans/auto-loans/9-steps-to-a-car-loan-on-damaged-credit/#slide=1

https://cars.usnews.com/cars-trucks/how-to-get-a-car-loan-with-bad-credit