Bad Credit Does Not Always Keep You Out Of A Car Loan |
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If you have bad credit and you want to buy a car, it is not necessary that you will be debarred from getting a bad credit car loan. If you can find out what you can qualify for in terms of what the lenders might offer you, you might be able to achieve your objective. Car-financing lenders won't give you the best, rock-bottom rates if your credit score is less than 680. It is also advisable that in such a case you should not submit loan applications to too many lenders in the hope that some one might approve your loan as this would further lower your credit score and make it even more difficult for you. It will be better to apply online as you might get decent rates from online lenders. Apart from this suggestion, given below are a few more tips to steer you towards getting the best bad credit car loan if you have a not-so-good credit rating. Make a Determined Effort to Save Money Before applying for a bad credit car loan, you must make a determined effort and do your homework carefully. You must remember that dealers survive on selling the cars and for that their customer list includes those with poor credit also. As such, they have a variety of financing deals which include deals with banks, credit unions and finance companies in addition to the deals with manufacturer's finance companies such as GMAC and Ford Credit. A dealer can definitely get you a bad credit car loan but the rate might not be the best. Moreover, dealers normally take a cut off the financing deals that they arrange. Therefore, if you apply to a bank on your own, you would get a lower interest rate than if you go through a dealer to the same bank. The interest rates vary from 11% to more than 20% and so, it is better to look around first. Check Credit reports for Mistakes You must obtain your credit report and check if there are any errors as a mistake or omission can reduce your score and thereby increase your interest rate. While looking out for a bad credit car loan, you must check with bank or credit union as they might grant you the loan particularly if you have a checking account or have some other relationship. A larger bank may have a whole department devoted to lending to people with flawed credit or they may have a relationship with a company specializing in sub-prime lending. Small banks are more prone to give out bad credit car loans and they work on a case-by-case basis. Meet the Banker Face to Face It is advisable to confront the bank's loan officer face to face and explain the compelling circumstances for your bad credit. Did a divorce, illness or accident throw you off track? This will definitely give you the desired result as this information would not have been available to him from an online application or from a dealer. Credit unions until now had the reputation of giving out bad credit car loans at low interest rates to members with good credit. Things are now looking up as many credit unions are now abandoning their all-or-nothing approach to financing like you either qualify for a low-interest rate loan or you don't. Thus members with all levels of credit are now becoming eligible to loans with appropriate pricing from the credit unions. People with less than good credit that qualify for auto loans receive rates just five points higher than loans offered to members with flawless credit. The current bad credit car loan rates range from 6-1/2%-11-1/2% on new car loans, and 7-1/4%-12-1/4% for used car loans. There are plenty of options for getting auto loans for people with bad credit. All that they have to do is to look out for the right option. |
