[Best] Bad Credit Auto Loans Lenders Of 2018 (July Edition)
Yes, bad credit affects almost anything you do that involves taking a loan, and this definitely doesn’t exclude getting a car loan. There are numerous ways your credit score can affect terms of your auto loan.
The interest rate is probably the most important. That’s the amount of money you will end up paying each and every month on top of the principal loan amount.
The lower your credit score, the higher your monthly payments and obviously the higher your interest rate. You will also be limited as to how much money you can actually borrow. If you need to don’t know your credit score is, you can go here to access your free credit score with no credit card required.
Best lenders and services for bad credit auto loans:
If your credit score is poor, then it is unlikely that you will qualify for a high dollar loan amount. In fact, your car search will be restricted to the loan amount you have qualified for, whether you think you can afford it or not.
Another side effect of having bad credit is the amount of money you’ll need as a down payment.
Whilst some bad credit lenders concentrate on loans with a zero or small down payment, many will probably need one. And if you want to buy a more expensive car than the loan you qualify for allows, you’ll need to make up the difference with more money down.
Finally, your credit score might limit the amount of time you have to repay your loan.
Having A Bad Credit? – Find Out How You Can Get The Best Auto Loan
Even with bad credit, you can still follow a few tips to get the best deal on your auto loan. Just as with any other major investment or purchase, it really helps to take your time with the entire process.
A few simple steps can make a world of difference in the type of loan terms you get, so be extra careful so that you are able to minimize your monthly payment.
1. Review Your Credit Report
Before you start car shopping, access a free copy of your credit report and review it for accuracy. This document has a huge impact on your ability to borrow money for a vehicle; after all, the information listed directly contributes to your credit score.
Even if everything is accurate, you need to know exactly what kind of information the car salesman is looking at when reviewing your financing application. If there are any errors on your credit report, you might need to fix it immediately. You can do it yourself if the errors are very minimal or hire some credit repair company to do it for you.
Whilst you hope you are dealing with a reliable individual, many dealership finance managers tend to use pressure tactics that are based on deception.
If you don’t know your own credit history, then that means you don’t know if any claims made against you are really true, and you could easily end up with a higher interest rate.
Even if you are dealing with a trustworthy and dependable lender, completely understanding your credit report can really help you explain past negative items, such as late payments due to sickness or temporary unemployment.
2. Create A Budget Based On Your Current Finances
Once you’ve reviewed your credit history, it’s time to figure out your budget. You need to view this from two totally different perspectives: the total monthly payment you want to pay each month and the total amount you want to pay for a car.
For example, both the amount of money you pay for a car that’s financed and your interest rate contribute to your payment amount every month. But even if you can afford any amount for a particular car, that maximum does not mean it is the right amount for every single vehicle.
Ensure that the sales price precisely reflects the mileage and condition of the specific car you are considering. Play around with some auto loan calculators and keying different price points and interest rates to help you find your target monthly budget.
Calculate how much your auto loan payment:
3. Negotiate The Purchase Price
When you have bad credit, you may not be able to change your interest rate, but you can negotiate the purchase price of the vehicle. There is absolutely no connection between the actual sales price and your credit.
As a matter of fact, your car salesperson should know nothing about your credit history. To significantly lower your monthly payment, particularly if you know you are getting a high-interest rate, then try a few simple negotiation tactics.
First, try shopping at the end of the month when the sales team is really struggling to hit target numbers. It is also advisable to go during off hours, like on a weekday morning.
When there are very few possible buyers milling around the showroom, then the sales staff is more likely to make an effort to seal the deal with you.
Calculate and compare your loan payments:
4. Avoid Unnecessary Upgrades
Even if you are an astonishing negotiator, always remember that car salesmen are specially trained to make a deal that is good for them. That basically involves using all kinds of psychological tricks to get to the exact number they want.
The best way for them to do this is through upgrades, even when you have negotiated a better sales price successfully.
Whether it is seat warmers, a custom paint color, even a warranty plan, or even a leather interior, it is very easy to get sucked into tacking on a few hundreds if not thousand dollars hither and thither. And that derail your plans to stay on budget for your monthly car payment.
If you want to avoid this kind of scenario altogether, it is important to adopt a firm no-upgrade policy before entering the dealership. Coupled with a maximum purchase price in mind, you will safely meet all your financial targets, even when your credit is not all that good.
5. Carefully Review Your Loan Agreement
Whether you get a car loan straight from the dealership financing department or through a bad credit lender, ensure that you have read all of the details before signing anything.
Don’t assume that everything is boilerplate; actually, there are numerous details you should confirm before proceeding with the loan.
First, double check that all of the information is accurate, including the interest rate, sales price, applicable fees, and even the make and model of the car.
Get everything confirmed and finalized before you take the car off the lot.
6. Repair Your Credit Using Your Car Loan
Repaying an installment loan is a great way to repair your credit, so after finalizing the terms and conditions of your loan, stay committed to being a responsible borrower.
All it takes is an on-time payment each and every month. Those monthly payments are usually captured on your credit report, so you’ll start to see a noticeable difference over time.
Obviously, in addition to accruing you expensive fees, late payments will hurt your credit score. But you can really benefit from an improved credit score only if you stay on top of your payments. In fact, you may even choose to refinance your car loan for a better interest rate.