When it comes to cars, auto loans are important. But, do you think your bad credit will make it impossible to get guaranteed approval on car loans? You are worrying for wrong reasons because you can get a car with bad credit.
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Here’s how you can convert your slim chances of getting a bad credit auto loan to instant approval.
Wrong: Filling Applications Right Away
You must never fill the auto loan application as soon as you feel the need of getting car finance. Actually, there are several things that you need to do before applying. We can divide every task related to getting guaranteed approval on bad credit car loans into Pre-application tasks and Post application tasks.
Know Your Credit Score/Payment History
No matter the type of loan, every lender will want to know how you pay your debts. He will judge the credit risk associated with you by understanding your credit report and payment history. So, it is important to know it and improve it beforehand.
We know that credit bureaus mess up credit reports. So, get your free annual copy from Annualcreditreport.com. Analyze the entries and look for erroneous transactions. Under the Federal Law, you can easily remove wrong entries from your report if the credit bureaus cannot prove its precision. Removing wrong entries can definitely improve your credit score and place you in a better place than before.
Set Your Budget
Cars are expensive and if you don’t calculate your budget, you may end up paying more. When it comes to making huge commitments like auto loans, you must know your affordability. It will help you avoid an unmanageable car financing program.
Calculate your budget by considering the auto loan term. If you want to opt for a longer term, estimate expenses of certain future events like wedding, college expenses, home loans, etc.
Save Money for Down Payment
Down payment is important for lenders. If you can put a huge sum as money down, it shows your financial strength. The lender will consider you as a low risk credit borrower. It will also reduce your auto loan amount.
But, we all know that getting even 10% of the car cost can be very difficult. So, start saving money for down payment from now.
Search for a Co-Signer
Your bad credit score takes a back seat when your lenders see a co-signer. Someone with a good credit score and decent debt-to-income ratio can work magic for your car loan. Finding a co-signer may take time and that’s why it’s better to start the job now.
Check Your Documents
When you have had financial issues in the past, the lender will be more interested in your income proof. Keep your current pay stubs and/or tax return statements ready. You can even ask your employer to provide an Employment Certificate. Arrange all your utility bills receipts because they can be used by the lender to ascertain your debt repaying ability.
Search for Sub-prime Lenders
When you have bad credit score, apply with lenders that have copious amount of experience in dealing with credit issues. Your approval chances will improve when you apply with a lender that offers bad credit car loans. Also, you will save time by avoiding stringent banks and other traditional financial institutions.
Make use of the internet to search for online auto financing that offer affordable car financing options. Most companies have a history of working with bad credit borrowers. So, don’t forget to consider them.
POST APPLICATION TASKS
Analyze and Compare Car Loan Quotes
When you apply with several lenders, you will receive many bad credit auto loan quotes. Analyze and compare each of them on factors like interest rates, monthly payments, APR, down payment, etc. Also, consider other aspects of the car loan programs like loan term, conditions, fees and penalty.
Negotiate with the Lender
As you choose few auto loan quotes, make sure you negotiate with the lenders. Sign the bad credit car loan contract with only that lender who negotiates and offers you a better deal.
Choose a Reliable Car among the Alternatives
It’s always better to choose a car after securing the car loan because lenders may ask you to choose the car from a pre-decided dealer/s. They may even give you a pre-approved budget. So, select the car later and avoid any wastage of time and energy.
Don’t forget to get the car inspected from your trusted mechanic. It’s important to check the car title and Vehicle History Report because once you sign the papers; you cannot do much.
So, that’s how you can buy a car. Once you buy the car, keep making regular payments so that it improves your credit score.
If you follow these tips, getting a car loan and making payments won’t be difficult for you.
Wishing you instant approval on your bad credit auto loan!
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