Tips for Getting an Auto Loan With Bad Credit

Bad credit car loans are available to those who have had some financial woes in the past, but are ready to improve their score. The key is knowing how to increase your chances of qualifying for a loan that has decent terms even though your credit might make finance departments a bit nervous.

 

Come Into the Dealership Prepared

 

When you are going to apply for financing at a dealership, there is some general information and documentation they need to ensure that you can be evaluated for a vehicle loan. You want to bring recent paystubs, your driver’s license, a utility bill and personal references. It is ideal that your paystubs show your year-to-date income so that they can better assess how much you earn monthly. With your references, at least one from an employer is helpful too.

 

Know Your Budget and Adjust Your Expectations

 

You should have a rough estimate concerning your budget when you walk into the dealership. Once you start working with the finance department, you might need to adjust your expectations based on the options they can offer you.

 

Prepare for a Larger Down Payment

 

Think of a larger down payment as a show of good faith. You are essentially telling the dealership that you are ready to drive off the lot today and that you know that your credit is not great, so you are giving them more upfront. This can be beneficial in helping you to get better financing options through them. To determine the best down payment, consider putting down 25 percent of the vehicle cost. For example, if you are planning to buy a vehicle that costs $10,000, bring at least $2,500 for a down payment.

 

You want to be upfront with the finance department about your credit history from the beginning. This saves time for all parties involved because they will be able to better focus their efforts on the options that you may qualify for.

What First-Time Buyers Should Know About Car Loans

Buying your first car is a thrilling if overwhelming, experience. There’s something so satisfying about making that investment for the first time. However, if you’re not prepared, financing your ride can be terrifying.

 

We believe in providing an exceptional car-buying experience. This experience should be exciting, not stressful. So, here are a few things you should know about car loans before buying your first car.

 

Total Loan Amount

 

When you discuss financing, you may hear about your total amount. This may sound complicated, but it’s just the price you negotiated for the car, plus any taxes and fees, minus your down-payment.

 

Interest

 

Don’t be confused by the term; the total loan amount isn’t the amount you will pay over the length of your loan. Car loans typically include interest, which is the percentage you pay to the lender for the service.

 

In the auto industry, you may see this rate referred to as “APR.” The lower the APR, the less you will pay over the life of the loan.

 

Monthly Payments

 

If you’re mostly concerned about your monthly budget, pay attention to your monthly payment. This will be your total loan amount plus your total interest, divided by the number of months on your loan.

 

Loan lengths can vary widely. You can get short, one-year loans or up to 84-month plans. The longer the loan, the less you will pay each month. However, you will be paying longer. We will work with you to find a loan that makes sense for your budget.

 

Know Your Credit Score

 

You may be able to receive financing no matter what your score is. However, your score may affect what type of financing you receive. For example, low credit may mean a higher interest rate. On the other side, if you have great credit, you may qualify for special financing options.

 

Don’t get overwhelmed by the terms surrounding car loans. Our financing professionals are here to help you understand and enjoy your first car-buying experience.

Advice for a Lower Monthly Car Payment

When you are checking out car loans, your monthly payment is going to be one of the biggest factors to consider. There are several elements to look at that might help to reduce what you will pay each month.

 

Get Pre-Approved for Your Loan

 

When you have an idea about what you might qualify for, this can help you to craft a budget before you commit to a loan. Factors like your personal financial situation and credit score will play a role in this process.

 

Put More Money Down on the Vehicle

 

Remember that the less money you need to borrow, the less money you are going to repay. When you put more money down, you can expect your monthly payment to be lower. This is due to less interest being able to accumulate, reducing your total loan costs. Your salesperson can help you choose your down payment based on your monthly budget.

 

Consider a Loan With a Longer Term

 

When you have longer to pay on your loan, this stretches it out and can make your monthly obligation smaller. However, keep in mind that the longer you take to pay on your loan, the more you are likely going to pay overall due to the interest having longer to accumulate.

 

Be Aware of All of the Fees

 

When you finance a vehicle, the loan might implement different fees that will increase the total amount of your loan. The larger your loan, the more you are going to pay each month to repay the debt. You want to look carefully at your loan documents before agreeing to it.

 

Talk to your salesperson at the dealership about what you might expect in terms of your monthly payment. In addition to the tips above, you might also consider a cosigner with good credit to get a more favorable loan which could help to reduce your total costs.

How to Get Pre-Approved for Bad Credit Car Loans

If you’re interested in shopping for new or used cars but your credit rating is abysmally low, all is not lost. You can acquire what is known as a pre-approval from credit unions or banks in order to get started on the process of upgrading your personal transportation. Pre-approval is basically a thorough evaluation that determines how much money a lender would be willing to grant you given your credit history. It takes a whole-picture approach to your credit evaluation and could make it much easier for you to get a good deal on bad credit car loans.

 

When you go for a pre-approval, the evaluator will look carefully at your income and your various expenses as well as your credit score. Because it takes into account so many factors, your pre-approval could paint a much more positive picture of your financial situation than a bare bones credit rating does. As long as you don’t undergo any significant changes to your source of income or your monthly expenses, you can use this evaluation to shop for bad credit car loans through your local dealership.

 

Since the pre-approval is meant to capture a wide variety of aspects of your financial situation, be prepared for it to take some time. It is possible that it could take up to a few weeks to be fully completed. However, once you have the documents outlining your financial situation, you will be able to take it to your local dealership to start the process of buying a new car.

 

It’s always important to remember that there are ways to overcome impediments to buying a new car such as a low credit rating. Bad credit car loans are always available, even if it might take a few extra steps to get a good deal. Fortunately, getting a pre-approval can significantly lower your rates on car loans with bad credit.

Top Reasons to Go With Dealer Financing

If you’re ready to find a new vehicle, it might be difficult when you’re contending with a bad credit score. Most traditional lenders like banks and credit unions are unable or unwilling to offer bad credit car loans, which makes it even trickier to land the vehicle that you need. If you’re in need of a car loan but you have bad credit, consider opting for dealer financing. Here are a few of the top reasons to ask your auto dealership about financing.

 

They’ll Work With Bad Credit

 

You might be a little hesitant to go to a car dealership for bad credit car loans. However, this could be a great option if you’re struggling to find financing elsewhere. Car dealerships are aware that not everyone has a sparkling credit history, but they’ll work with you to find reasonable loan terms that you can afford. Car dealerships are often willing to sit down and have a conversation with you about your credit history and what you can afford to find the best possible loan terms for your situation.

 

Convenience

 

It’s a hassle to secure bad credit car loans at another financial institution and work out the details at your car dealership. When you opt for financing from the dealership itself, you make the process much simpler and stress-free. This way, you can avoid making extra trips to several different locations and handle the test driving and purchase process all in one day.

 

You Might Qualify for Discounts

 

Some car dealerships offer rebates or discounts for members of the military or recent college graduates. Most banks don’t offer any appealing incentives for those with bad credit, no matter what your situation is. If you’re a recent college grad or you believe you might qualify for other discounts, ask your car dealership if they’re able to offer a discounted price or better terms on bad credit car loans.