Many people think that if they have bad credit, they cannot finance a new car or get their current car loan refinanced. This is not the case. Often car dealers will give misinformation such as the necessity to buy an extended warranty or credit life insurance, and since people don’t really know the possibilities, they sign a contract with the car dealer’s high interest loan.
For those who know they have bad credit, it is best to know what they can afford to pay every month before approaching a car salesman. Never take a car loan that costs more than is affordable. This amount should come after paying any other bills. For those who have had a job for at least a year with a steady income, a bad credit loan has a better chance of being approved.
Advice for Getting A Good Rate
It is also a good idea to make a large down payment. The amount will differ considering the type and model of car, and could be a few hundred dollars to a few thousand. It will be worth saving for this, because it will also help in getting a bad credit car loan approved.
Credit unions are a little more relaxed than banks or financial institutions for giving car loans to people with bad credit ratings. The longer you are a member of a credit union, the easier it will be to get a car loan.
Local banks will also be more lenient for a customer who has already paid off a loan with their bank even if they have bad credit with other banks.
Having a co-signer will also help a borrower get a bad credit car loan. The co-signer will need to have good credit and meet other requirements.
Many car dealers are affiliated with lenders who are willing to give loans to buyers with bad credit ratings. In this way, buyers may not have a choice of where to look for a car, but if they can find a car they want at the required dealer, they will get credit. This is a dealer network system that works online. If the customer finds a website that will sell a car to a person with bad, they will be asked a few questions and the information will be sent to several car dealers. Since the service is free, customers need to know that the site they are using is reliable. There are honest dealers and unscrupulous dealers. Also, some networks are much larger than others. A large network gives the customer a better chance at getting a loan for a car they want.