3 Tips to Repair Your Credit – Starting With Getting a Bad Credit Car Loan

Having bad credit is nothing to be ashamed of. We have many customers each day that approach us for car loans, but are embarrassed by their credit situations. They also believe that because they have bad credit, they will not be able to get a good car loan that they can actually afford. We want all of our customers to know, first, that we are here to help them get the best cars and the best car loans for their needs. Therefore, we will not pass judgment on them because they have bad credit. In fact, if our customers have bad credit, they are still able to get great cars at amazing car loan rates.

However, by taking some small steps to repair their credit, our customers will be able to position themselves to get a better car loan rate years down the road. We can recommend some simple changes today that will help each of our customers set themselves up for lower interest rates and higher loan amounts years down the road. Here are a few tips for our customers that can help them repair their credit:

Get that car loan

Go ahead! Even if you have to take out a bad credit car loan, you will not only be able to drive away in a car, but you will actually be rebuilding your credit. Whenever you take out a bad credit car loan, you will be setting yourself up to get a good credit car loan down the road. Why? Because as long as you repay that bad credit car loan, you’ll be showing future lenders that you have a history of being financial stable and of being responsible enough to repay your car loans. Future lenders will like that!

Stay put

If you have been changing your address or job frequently, we know that this may not be your fault. However, it will still reflect negatively on your credit. Therefore, stay put as much as you can. This means keeping the same mailing address and, if possible, keeping the same job.

Minimize debts

It’s important that you keep your debts as streamlined as possible. This means that you minimize the number of debts that you have. Close old credit card accounts that you no longer use. If possible, transfer your credit card balances to one card as well. Lenders want to see that you have as few financial commitments to other lenders as possible so that they will know that your financial commitment to them will take priority.

Facts About Car Loans

If you’re in the market for a new car, you may be considering your financing options. In today’s economy, many people do not pay for cars with cash. Instead, people may look to obtain car loans through financing and pay the loan back in monthly installments.

While you’re crunching numbers, it may be helpful to review the following facts about obtaining financing for a vehicle. The more you know, the better prepared you’ll be to get the best financing for your quality used car.

Credit Scores Are Important

It’s important to remember that your credit score can provide a general financial profile. Various questions may be answered by reviewing a credit report. Have you paid your past debts back in a timely manner? Do you have a high debt-to-income ratio? How long have you been working on establishing your credit?

Your credit score can also make a difference in the interest rate you’re given and the amount of money you’re allowed to borrow. If you have low debt compared to the pay you bring home, you may qualify for a higher car loan. If your debt-to-income ratio is high, you may be awarded less money in a loan.

Shorter Terms Can Offer Better Interest Rates

Sometimes, a shorter-term loan can offer you better interest rates. A lower interest rate is often worth pursuing, as it can save you money in the long run. If it’s possible, look to obtain a loan for payback in three years instead of five. When pursuing a short-term auto loan, though, it’s important to be sure you can afford the monthly payment.

When purchasing a car today, many people are choosing to finance their car loan instead of paying in cash. Knowing the importance of your credit score and choosing a short-term loan are tools for getting the best loan possible.

Financing a Used Car With Bad Credit

When you have bad credit, it can be difficult to finance a used car. Everyone needs reliable transportation, but having bad credit oftentimes translates to higher interest rates and car payments. Despite these common obstacles, there are ways to get financed, even if your credit isn’t in the best shape. If you have a low credit score and you are in the market for a used car, here are some things you can do to increase your chances of securing financing.

Make a Large Down Payment

Making a large down payment is a simple, yet effective way to boost your chances of getting approved for financing. It shows financial institutions that you are serious about purchasing a vehicle and that you are capable of saving and managing money. You also present less of a financial risk, since buyers who invest large sums of their own money are less likely to default on loans. Buyers who make a down payment may also gain access to better interest rates.

Rebuild Your Credit

This may seem like an obvious course of action if you have bad credit, but it is the most efficient way to ensure that you get approved for a loan. Paying off overdue bills and establishing a history of responsible credit use can go a long way when it comes to securing financing. Car buyers with lower scores will be subject to higher rates and less favorable payment terms.

Use a Cosigner

Using a cosigner can greatly improve your chances of getting financed. Enlisting the help of a spouse or close family member is the most common practice when it comes to cosigning. It should be noted however, that if you do not make your monthly payments on time, your cosigner will also be held responsible.

Don’t Despair

In the world of used cars, there are practical ways to secure financing with bad credit. At our dealership, we offer customers a variety of financing offers, and we are sure that we can work with you, regardless of your financial situation. Don’t give up just yet; there are many ways to finance a car with less than perfect credit.

Tips for Improving Your Credit Enough to Get a Car Loan

When you need to buy a car, but your credit’s bad, you may struggle to find a loan at all, let alone one with the type of terms you can live with. However, there are some things you can do to ensure that you’ll be eligible for bad credit car loans.

Work Toward Improvements

Even though you have bad credit, you can turn it around enough to at least show some improvement. This single step may help you work out better terms than you might expect from a so-called “bad credit loan.” To complete this step, check out your current credit score. Sometimes, the reporting agencies will also provide tips on how you can improve your score. Within months, you should see some progress, and this can help you get into a better loan situation.

Don’t Rack Up Inquiries

Did you know that every time you apply for a loan, your credit score takes damage? If you head into one credit purchase after another, you’ll end up damaging your chances of getting any loans, even those that are intended for people with low credit scores. When you’re ready to shop for a car, don’t open up an account at your favorite shopping center.

Don’t Be Misled by Low Interest Rates

Loans with longer terms generally have lower interest rates. Short-term loans, on the other hand, have higher interest rates. In many cases, in spite of those higher rates, you’ll still spend less when you choose the short-term loan. If you can’t qualify for one of these loans, be sure to check about an early pay-off penalty, so that you’re free to pay off your debt as quickly as possible.

Make All Your Payments On Time

As you’re working hard to improve your credit, you may be tempted to pay more towards one loan and let other loans suffer. However, every late payment can damage your credit score. This is especially true of any mortgage payments.

As you work toward improving your credit to the point that you can get a loan for that car you need, carefully stick to good credit principles. In time, you’ll have a score to be proud of.

Tips for Paying Off a Car Loan Faster

As you’re looking at the perfect new car to buy and figuring out financing, it’s a good idea to think ahead about paying off your car loan. Car loans might be a part of life, but that doesn’t mean you have to spend more years than necessary paying them off. Here are a few methods you can put to good use to become the legal owner of your car ASAP.

Make Principal Payments

Depending on your lender, you might be allowed to make principal-only payments. If so, take full advantage of it. What that does is cut down on the amount of interest being applied to the total remaining loan, and you pay your loan off faster.

Pay Your Loan Twice a Month

Another good idea is to split your monthly car loan in two, making a payment twice a month. The reason this is a good idea is that you make 13 payments a year rather than 12. Not only do you pay your loan off faster, you also save money in interest.

Round Your Payments Up

When it’s time to make your car payment, round up to the nearest $50 whenever possible. You can combine this tip with the one above, splitting your payment in two and adding an extra $25 to each.

Use Extra Cheques, Bonuses and Tax Refunds

After a while, paying your car loan can become just another monthly financial obligation to take care of. This means you might forget about it when you get an extra cheque, your tax refund or a bonus at work. When you do get some extra cash, stop for a moment in your excitement and think about how you can best use those extra funds. While making an extra car payment might not be as exciting as a new pair of jeans or home renovations, your future self will thank you.

A few tips and some strategy are all you need to pay off your car loan early. Be sure to put these suggestions to good use.