How To Get A Car Loan When Your Credit Is Poor
Just because you currently have a poor credit rating does not mean that you can't get a loan to purchase a new or used vehicle. Here are a few tips that will help you secure a loan for a new vehicle even when your credit is less than ideal.
#1 Don't Count Yourself Out
The first thing you need to do is not count yourself; just because you think your credit score is low does not mean that you will not be able to get a loan. Lenders look at the details and length of your credit history, not just the story that is currently told by the numbers your credit score generates right now. For example, if you have years of great credit and just a few years where your credit history report went down, and you seem to be on the mend again, you may be a perfect candidate for a particular lender.
#2 Shop Around For A Lender
Second, you should research different lenders in your area and try to find a lender that likes to work with the local community; they may be willing to work with you even if your credit score is less than ideal. Start by seeing if your bank or local credit union will work with you on a car loan. Be cautious about lenders that specifically only serve individuals with poor credit; many of these lenders charge high fees for the credit that they provide you with.
#3 Save Up For A Deposit
Third, before you start looking for a new vehicle, save up so that you can make a substantial deposit on your new vehicle. Having the money to make a significant down-payment means that you will need to take out a smaller loan; both of these factors can make backing your loan more appealing to lenders who may be a little wary of your low credit score.
#4 Pay Attention To The Loan Terms
Finally, when shopping around and figuring out if a lender is right for you, do not be swept in by low monthly payments that extend over a long period of time. Often times, low monthly payments mean that you will be paying out more interest over the life of the loan. Try to find a lender who is willing to give you a lower annual percentage rate and a shorter loan period, so that you are able to pay less in the long run for your new vehicle. You don't have to settle for a long loan just because you have a low credit score; in fact, your desire to have a loan with a shorter term could help you secure a loan in the first place.
Contact a local provider, such as one from Community Resource Bank, for further assistance.