Need a new vehicle, but have bad credit? Getting a car loan may be more achievable than you think. Here are some strategies to increase your success before applying for a car loan and finalizing the deal with your chosen lender.
Improve Your Credit Score: Learn more about Zingo
Strategies for Successfully Obtaining an Auto Loan
Know your credit score … and increase it if possible
Check your credit score if you haven’t done so recently. If your credit rating is in the “fair” or “very bad” category, do what you can to increase your credit score before applying for a car loan, as Jack Ferry and Rachel Witkowski of Forbes suggest. Make sure you pay your bills on time and correct any errors you notice on your credit history.
Provide proof of stability
Gather documentation that proves your personal stability. According to Ferry and Witkowski, lenders will usually ask you how long you’ve been at your current residence and workplace. It is good to have recent pay stubs and proof of your address on hand.
Establish a budget
Budget for what you can afford to spend on a vehicle, recommend Ferry and Witkowski. It is best to do this before you start buying cars and applying for a car loan so that you don’t be tempted to buy a car that is not in your price range.
Save for a down payment
Take the time to save for a down payment before applying for a car loan. According to Hanneh Gundersen of Bankrate, this increase your chances of being approved for a car loan despite a bad credit history. You will also want to do as big as a down payment like you can. This shows the lender how serious you are about paying off the car loan, says Experian’s Stefan Stolba.
Get pre-approved for a car loan before setting foot in a dealership’s field to find your new vehicle. Dealers will be more likely to work with you to obtain financing if you have already been approved by your bank or credit union.
Take the tour … and check with the dealers
Find the best auto credit before committing. Many car dealerships offer on-site financing either through a partnership with another lender. And some dealerships offer financing through an auto loan finance affiliate of a car manufacturer, such as GM Financial.
Discover the advantages of a car loan. Next, increase your knowledge of how a car loan works.
Whitney russell resides in Dayton, although his spirit can be found on the beach in Puerto Rico (the land of his half-Puerto Rican heritage). When not creating car-related content, she can be found chasing after the world’s most amazing toddler, watching her husband “beaver” build amazing carpentry projects, hanging out with two. mad dogs and visiting family and friends. She also enjoys traveling, creating and watching period dramas when the weather permits. See more articles from Whitney.