Find a car loan, even with bad credit
You need a loan, specifically a car loan, but you’re having trouble convincing lenders that you’re a good credit risk. Your credit scores are marginal, if not terrible. But you still need a car. Where can you turn for affordable financing options? Just as important, where can you turn for financing options that won’t make your financial struggles worse or draw you into some kind of scam? Keep these considerations in mind.
Credit Problems and Car Loan Options
Unfortunately, most honest and established lenders will probably require something from you in order to mitigate their level of risk. This often means that available deals come with higher interest rates, a much higher down payment, a form of collateral, or a long list of documentation that might counter your credit score and make the case that you’re a reliable borrower. These documents may include proof of employment. So be ready to present this information if you find a financing option that meets your needs.
Instead of consulting only with the dealer, try looking online first to see if you can research financing options on your own. Online lenders are very competitive, and may accept higher levels of risk in order to gain your business. Online comparisons are also more convenient, and you’ll be presented with a wider array of options than you would if you turned to the dealer alone.
Keep an eye out for illegal lending practices. A borrower with bad credit should expect to pay between 7 and 18 percent for a car loan. But some loans, often called title loans, require the borrower to take out an additional 7- 18 percent loan if the original is not repaid within a specified period of time. This predatory practice is widespread, so be careful not to become a victim.
Try using an online application service in which you submit your financial information to one company who then hands that information off to several potential lenders who can compete for your loan. If your credit is poor, you may not draw as many competitors, but even two can save you some time and money.
In the meantime, find out what you can do to raise your credit scores. Sometimes consolidating multiple loans can help. Consult with a financial advisor to discuss the details of your specific situation.
If you’ve ever had to overcome bad credit in your search for car loan options, what did you learn from the experience? Share your comments and advice below.