It is actually possible to buy a new or used car with poor credit. There are ways to increase your approval chances and also get a lower interest rate. Of course, you should be prepared before you go with the process. People with a good credit record will have many options. On the other hand, if your credit is bad, you must search for a good deal. Here are 4 great tips on how to get a car loan with bad credit.
Do You Know What Your FICO Score Is?
A FICO score can be anywhere from 300-850. The lower the FICO score, the higher the interest rate you'd get on an auto loan. A low FICO score would not make a car loan impossible. But it would mean greater interest rate.
Before applying for an auto loan, obtain an online copy of your credit report and score. If your FICO score is lower than 600, you might want to consider postponing buying a car. You should spend 6 months to bring your score up.
Have A Steady Job
Along with credit report rating, auto loan lenders require applicants to have steady employment. Applicants must usually earn at least $1200 per month. Steady employment means having the same employer for 90 days. So you must avoid changing jobs every two to three months. To prove employment, auto loan lenders may request copies of recent paycheck stubs.
Use A Sub Prime Auto Lender To Get Pre-Approved
Before you look at the car selections at the dealerships, try to get approved with an online sub prime dealer. These can help people with bad credit get financing. There lending requirements are flexible however, sub prime auto loans have higher interest rates. If you really cannot wait, then go with the higher interest rate and just refinance later.
Have A Co-Borrower
The easiest way to get approve for an auto loan with bad credit is to apply with a co-borrower. If the person co-signing the loan has excellent credit, this may justify a better rate. But you must also be aware that there are risks when you have a co-signer. If the primary borrower becomes incapable of making regular monthly payments, the co-signer becomes responsible for the loan.
Do You Know What Your FICO Score Is?
A FICO score can be anywhere from 300-850. The lower the FICO score, the higher the interest rate you'd get on an auto loan. A low FICO score would not make a car loan impossible. But it would mean greater interest rate.
Before applying for an auto loan, obtain an online copy of your credit report and score. If your FICO score is lower than 600, you might want to consider postponing buying a car. You should spend 6 months to bring your score up.
Have A Steady Job
Along with credit report rating, auto loan lenders require applicants to have steady employment. Applicants must usually earn at least $1200 per month. Steady employment means having the same employer for 90 days. So you must avoid changing jobs every two to three months. To prove employment, auto loan lenders may request copies of recent paycheck stubs.
Use A Sub Prime Auto Lender To Get Pre-Approved
Before you look at the car selections at the dealerships, try to get approved with an online sub prime dealer. These can help people with bad credit get financing. There lending requirements are flexible however, sub prime auto loans have higher interest rates. If you really cannot wait, then go with the higher interest rate and just refinance later.
Have A Co-Borrower
The easiest way to get approve for an auto loan with bad credit is to apply with a co-borrower. If the person co-signing the loan has excellent credit, this may justify a better rate. But you must also be aware that there are risks when you have a co-signer. If the primary borrower becomes incapable of making regular monthly payments, the co-signer becomes responsible for the loan.
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