What can I do to improve my chances of approval for a bad credit car loan?

Sept. 13, 2011 - PRLog -- If you are reading this article, chances are you are already in the process or thinking of applying for a car loan. Don’t let the “0% financing” or “We must sell the over stock units”, “mid-night madness” advertising slogans fool you. Every manufacture always put out their best or lowest interest rate to attract customers, but read the bottom of every ad carefully, there are always the fine prints of “O.A.C” or “On Approved Credit”. In another word all these advertising hype is for qualified customers or some one with good credit.

The real world interest rate lingers around 15-30% depending on your risk factor. If you are in need to finance a vehicle and you currently have bad credit. The world of low interest rate is simply out of your reach. The banks or lenders will look at your credit report and asses your risk factor accordingly. The factors include how much current debt you have, how much income you are pulling in every month, are you living on your credit cards, do you own a house or have a mortgage. In the end of the day the lenders or banks would like to know if they are lending you the funds it will be safely paid back with interest attached. No one wants to invest in something that will eventually tank.

There are few ways for you to improve your chances of approval if you have been turned down already. First of all you should gather as much cash as you can afford to pay off your credit card debt. Banks or lenders will lower your credit score if your credit card debt is beyond 50% of credit limit.  For example if you have a $10,000 dollar credit limit and you currently have $6,000 credit card debt. You should decrease that loan by at least $1000. Secondly having a strong co-signer is always a plus, having some one with A1 credit score can improve your overall chance of approval, some times that one person is the only thing stands between your car loan approval or decline.

If you currently are driving a vehicle, having the car traded in with your purchasing dealer can increase your chances as well. Using your old vehicle as a trade in will decrease the overall loan amount or “capital cost” in the finance world. Lower the capital cost translates to lower the risk levels. For the mean time you should ignore the interest rate charges, if you are in need of a vehicle for work or family you will have to swallow the high interest charges initially. With 12 months of good paying behavior you can re-negotiate your interest rate with your lenders.

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SOS Car Loans is Toronto's leading no credit check car loan provider; we can approve everyone, even without a credit check. If you are tired of been turned down all the time, visit us online at http://www.soscarloans.com