Things to Do Before Applying for a Bad Credit Auto Loan

For many of us today, owning a car is a necessity. After all, such movable asset can help us perform our day-to-day tasks. We use it to run errands, to travel from our homes to our places of work and vice-versa, and to address household emergencies.

Still, we cannot disregard the fact that purchasing one can surely have a huge impact on our personal or household budgets. No wonder many consumers today decide to apply for financing deals with banks and commercial lenders just so they can have enough funds to buy and soon drive home their dream cars.

Suppose you have bad credit. How can you get approved for a suitable credit program, despite your less-than-perfect credit history? Let’s find out.

Preparations Before Applying for a Bad Credit Auto Loan

Check your credit report.

When was the last time you checked your credit report? If you haven’t done so for the last six months, it is recommended that you order a copy of your report before submitting your car loan application. You need to know exactly where you stand when dealing with bad credit loan lenders.

Some lenders may take advantage of your situation and say that you are not qualified for a lower rate because you have an extremely low score. This is especially true with car dealers who offer financing options. Your dealer may tell you that you have a very bad credit rating when in fact it just needs a minor improvement. Hence, when negotiating with a prospective lender, it’s best to show them your own copy of your credit report.

Prepare for a down payment. 

You will need to save up as bad credit car loans usually require anywhere from 20% to 50% down payment depending on the lender and lending laws governing your State. Since you’re required a bigger down payment, be sure to request for a lower interest rate.

Go for the cheaper car. 

Obviously, this isn’t the best time to purchase an expensive car. Why apply for a bigger loan when you wouldn’t be able to enjoy the lowest possible rate because of your bad credit? If you can afford to wait for a few months before making the car purchase, you can use that time to raise your credit score so you won’t have to go for subprime loan. Nevertheless, if you really need to purchase a car at this time, use your bad credit car loan to recover from a bad credit standing.

[Article: In Search of a Bad Credit Car Loan]

Compare bad credit auto loans. 

Lending companies offer varying interest rates and fees. Conditions and terms can vary as well. Be sure to compare lenders before making your final decision. More importantly, read and understand your loan contract before signing up. You need to carefully review your contract to make sure that there are no hidden fees or unfair terms associated with your loan.

Elizabeth Roberts

Elizabeth Roberts

Liz Roberts and her team are continuously providing information to people who are ready to repair their credit and improve their credit score. Also NewHorizon.org team strives to empower the homebased and small business owners by bringing information that can help them to manage and grow their businesses. Let our 24+ years of business finance experience help you to get the financing you need! CONTACT US if need financing for your business.

2 Comments
  1. If debts are piling up on you and you are not able to wriggle out from under the mountain of problem credit, life can indeed be very miserable. In such a condition, consumer credit counseling can prove very helpful and will help you steer away from any possibility of bankruptcy. So, if you have problem with credit the right thing to do is to apply for consumer credit counseling. By doing so, you will take the first step toward financial freedom.

  2. Thanks for pointing out that a down payment is still necessary for an auto lending service. I’m planning to have a car soon because my grandfather is sick and I would need to sometimes visit him during the weekends when public transportation is hard to come by. With my own car, I will be more mobile and be able to attend to taking care of him while not sacrificing my time to be at work during the weekdays.

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NewHorizon.org is an independent, advertising supported website. The owner of the site may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website. NewHorizon.org has not reviewed all available credit card offers in the marketplace.

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