Getting a car with bad credit can be tricky but not impossible. Getting declined is not fun so it is important to know the way to get a loan with the highest chance of getting approved. Read further to find ways for car loans bad credit strategy.
Federal Highway Administration statistics show that there were more than 200 million private and commercial vehicles registered, where the majority of vehicle purchases were financed. The reason is because cars are important and yet they are not cheap. The average auto loan for a car is somewhere in the $30,000 range for a new car, while for a used car it is around $20,000. For someone who has a stellar credit score, getting a loan is not only easy, it is also with a very low interest. So if you do not have a good credit, how do you get car loans bad credit?
Here are some things to prepare before you purchase your next car
First things first, you have to work on your credit. That means, you should not have a late payment or unpaid charges from credit cards, store cards, gas cards, or other type of loans that you might have. Go online and check on the status of all your existing credit cards and loans and make sure everything is in a good order.
Once that is done, the next step is to check on your credit and credit score before getting car loans bad credit. You might think getting a credit score is difficult. The good news is, it is very easy and it is free. You can easily go to Credit Karma and obtain your latest credit score as well as your credit report. Please verify and review all the information you have in there in case you miss something in your previous attempt to resolve any pending charges.
The next step is to wait a little bit after you pay all pending charges you have, because it takes time for those records to be updated with all your lenders and for them to update the credit rating bureau. This is the best approach because with a better credit score you will get a better interest rate. However, in cases where you cannot wait and must get your car immediately, then do the following:
First, check for any sale event at your nearest car dealers. This is where they usually have a bigger discounts or other offers such as no down payment, low or no interest, and other perks. The other reason why this is a good opportunity is because the sales person usually have a quota and they want to secure all deals.
Secondly, during negotiation, try to put down a bigger down payment. Having a bigger down payment will not only reduce your interest but also give you a bigger chance of getting the loan approved the financial institution. Some dealers also provide their own financing option so please ask.
Last but not least, if you fail to secure a loan with all the above, the next option for car loans with bad credit is to go to a used car dealership because they usually have a much lower requirement for credit score. Their financing terms, as well as the down payment requirements, are more forgiving, so your chances of getting approved will be significantly higher.
Auto Loans for Good, Fair and Bad Credit
|Credit score||Average APR, new car||Average APR, used car|
|Source: Experian Information Solutions|
|Deep subprime: 300-500||14.41%||19.98%|