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How To Get A Car Loan With Bad Credit Score

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In the beginning of the global recession, it was almost impossible for buyers

with a bad credit score to obtain car loans. The good news is that it is now a

good time to buy a car. In the past two years, the number of approved auto loan

applications from buyers with lower credit

scores has been on a steady rise. Not only are

lenders granting more bad credit auto loans

these days, the average credit score for

financing a car has decreased several points

and buyers are even gaining access to more

substantial loans. Lenders are also providing

lower monthly payments.

Tips on how to obtain car loans for bad credit

Find out your credit score

Aside from your credit report, which you can secure at no cost from pre-

eminent credit bureaus once each year, you also have to get your credit score,

which you can purchase from the same agencies or from FICO. If you know

your credit score, you will know what car and financing options are available to

you. You will also determine the interest rate you will likely pay when you

obtain a loan.

Check out more than one lender

Lenders make use of various criteria to help them come to a decision whether to

grant your loan application or not. Your credit score will be one of these

variables. Nevertheless, even if your score is low, you should not assume that

you are not anymore eligible for loans since one loan provider may accept a

score that another lender wouldn’t. That said, you should check out a number of

loan companies.

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Build your savings first

For the majority of car purchases, the

bigger your down payment is, the better.

This is considerably more important if

your credit standing is poor. Lenders will

be more likely to approve your loan

request if they know you can pay around

20% of the purchase price as down payment for a new car or around 11% for

pre-owned ones.

Obtain a loan before you go to the dealer

Dealership financing is costly and multiple requests for your credit report can

negatively impact your credit score. Therefore, it would be smarter if you obtain

a loan from your bank or other lending institutions before heading to the car

dealership.

Consider a reliable, pre-owned vehicle

If you have a a low credit score score, it is usually much easier to get a loan for

a used car than a brand new one. Pre-owned vehicles can give a decent value for

a lower price, but you need to learn as much as you can about the car prior to

buying it. Research the fair market value of the car, verify its history, and have

it examined by a dependable mechanic.