[I]f you have bad credit, it can be difficult to qualify for a car loan. However, it’s not impossible. Before you go out and apply for money to purchase a vehicle, there are some things you should know.
Check Your Credit
Before you fill out any applications for car loans, you need to take a look at your credit. It’s even a good idea to pay for your credit score so you know where you stand. Make sure all information is accurate or dispute any errors you find.
Once you know what shape your credit is in, you can apply to lenders who approve applications in this range. You might be surprised to find out your credit score is higher than you thought, which means you have more options.
Consider Interest Rates
If you truly have poor credit, you’ll need to find lenders who specialize in car loans for bad credit. This means you can expect to pay higher interest rates than someone with good credit. However, the rates between companies often vary by quite a bit. It’s a good idea to shop around to find the best rate.
You’ll find car loans for poor credit online, but make sure you’re dealing with a reputable company. You can also talk to your own bank and find out if they would accept you with a co-signer or collateral. Collateral just means you promise some item in return if you should not be able to pay back the loan. Collateral loans are often less expensive than personal loans.
Car Dealer Financing
You can also shop for your vehicle at a car lot which promises all credit is approved. They guarantee financing because they work with finance companies that will take any credit. Find out ahead of time about the interest rate and terms and compare it with offers you find online. In some cases, the dealer financing will be less expensive or at least provide lower payments.
If you do get financed for a vehicle with bad credit, work to improve your credit so you can refinance for better terms. Once you pay off your car loan, it will help improve your credit history as a positive account.
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