Auto Financing for the Credit Challenged |
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If you're worried about your flawed credit hampering the purchase of the car you want, you can relax.
Lenders relax standards for those with poor payment history Nowadays banks, credit unions and finance companies give loans to even those with bad credit. Many who didn't qualify five years ago for an auto loan are now able to do so. According to Art Spinella, Vice President of CNW Marketing Research in Bandon, Oregon, credit standards have been made so loose that anyone can qualify. Work to save money A good deal depends on the number of bumps on your credit and the extent of your preparation before visiting an auto loan dealer. Dealers want everyone to buy their cars, including those with damaged credit. Therefore, apart from financing by the manufacturer's finance company, like GMAC and Ford Credit, they also have financing deals with banks, credit unions and finance companies. Leave it to the finance manager to find someone to approve your loan. It only depends on what you want to pay. You may not get the best rate around, but you will get a car. Not every lender will offer you a good rate right away. Check credit report for mistakes Get a copy of your credit report before comparing rates to check accuracy and update information. You wouldn't want to get bumped up to a higher rate on account of an error. For auto loans, don't forget your bank or credit union too. Banks follow the broad trend toward customer service and might ignore credit standing. They are reluctant to turn a customer away, especially if that customer has a long relationship with the bank. Larger banks even have entire departments for customers with flawed credit or a relationship with specialists in sub-prime lending. Smaller banks are more likely to approve loans to flawed credit holders on an individual basis. The number of accounts you have in the bank also improves the chances of their willingness to oblige you. Ditto for credit unions. Meet the banker face to face Apply for an auto loan with confidence. Be clear about past problems like divorce, illness or accident. The fault may be a bill paid 30 days late while switching jobs. All the details count and they aren't mentioned in online applications or referrals from dealers. Many lenders still follow the all-or-nothing financing approach, which means you either qualify or don't, but others offer a range of rates. The choices are out there Therefore those with bad credit still have auto loan options. All they need to do is find them. Get an early start and apply for financing before car shopping to cut down your auto search. Find out the size of the loan you qualify for and the rate to help you realistically decide on the car you can afford. Experts advise considering auto purchase as three separate negotiations when meeting dealers. The three are the price of the car, price of trade-in and financing. Don't let the salesman lump it all together. Blinded by the interest rate Avoid spot delivery and consenting to dealers who suggest you take the car home while they finalize the financing. There's every likelihood that they'll turn out claiming inability to offer their promised financing deal. You'll end up with a bigger down payment or higher interest if not both. Take it as a warning sign to look elsewhere. Be sure to get a used car checked out by an independent mechanic! |
