How to get an auto loan with less-than-great credit
Credit card woes have been plaguing Americans for years. Recklessness, often in the form of overspending or missing payments, is an all too common pitfall that can put an economic strain on the debt carrier as well as the rest of their household. If your credit score is below 580, your credit falls into the lowest range. It’s categorized as “bad”, which employers, landlords, and banks often see as an indication that you’ve been financially irresponsible. Bad credit can be a barrier to many things, including renting property and seeking a loan. But if you’re in dire need of, say, an auto loan, what options do you have when your credit is low? Though this experience can undeniably lead to major challenges, we have a few tricks that can help you on the road to receiving an auto loan. Read on to remedy your panic with our solution-oriented suggestions.
Lean on your loved ones
If you’ve been shopping around for a loan with no luck, it may be time to seek an outside resolution. Banks view your credit score as a reflection of your reliability, and it’s very possible they’ll be hesitant to float you the large chunk of cash you’re asking for. One method of persuasion is to find a co-signer: someone who agrees to provide payment if you fail to. A co-signer should be someone with a steady income and the means to live up to their promise if necessary. Co-signers can be a parent, sibling, or close friend, and their credit score should be high enough to justify the bank’s trust in them. Ideally, your co-signer will never be put in the position to pay off your debt, but having someone to fall back on in a financial emergency will increase your likelihood of getting an auto loan.
Save, save, save
If you want to demonstrate financial capability to your bank, start by saving up for a down payment now. Offering a down payment up front will usually result in lower monthly payments, and it also illustrates your commitment to being responsible. For those whose eyes are currently bulging at the prospect of hoarding a lump sum of money, don’t over stress about the number you have saved. Even an amount as small as $1000 can help you out going forward and begin the process of repairing your economic future.
Shop around
Your current bank or credit union
Don’t let one rejection stop you on your hunt to be approved for a loan. Just because one location says no, this doesn't mean that your “yes” isn’t right around the corner. If you have a pre-existing relationship with a bank or credit union, we recommend starting there. Because you’re a valued customer, they’ll have a better understanding of your credit history and likely be more empathetic to your plight.
Online options
These days, the internet is integrated into almost every facet of our lives. Online lenders can save you time, allowing you to apply for prequalification without commuting to a bank or credit union. These online services can also offer insight on what kind of loan you are qualified to receive. Bankrate and Life Loans are two online lending options that are available to those with bad credit scores.
Car dealerships
Car dealerships do more than just sell cars. Because they often have connections in the loan world, they can turn to their networks and match you with a lender who’ll be willing to give you a loan. Remember: car dealerships want you to purchase a car. They might even be more excited by the idea than you are! This means they’re very motivated to get you that loan, so it never hurts to ask what they know and use that information to your advantage.
How can I raise my credit score?
If you’re looking for more than just a bandaid for your credit trouble, raising your credit score over time is certainly possible. This can be accomplished by paying off your credit card debts in a timely manner and limiting the number of credit cards opened in your name. Remedying your credit score can be a slow process, but it will be worth it in the long run for your financial success.
Shop Transwest
If money is an area of concern for you, Transwest is here to help. Read about the financing options we’ve developed, so our products can be accessible for everyone. Once you’re ready to move forward, visit one of our locations so we can help you find your dream car.
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