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.