How do you benefit from a poor credit score situation when you have to buy a car?
A poor credit score can cause undesired problems, but there are many methods to increase your chances of getting a bad credit auto loan with competitive rates.
Here's how in eight simple steps:
Know what to expect
It is beneficial to know from the start that consumers with bad credit generally are given higher interest rates than those with a good credit score. So if they are approved for a loan they have to pay more money.
If buying a car now is a necessity, why not turn yourself into a smart buyer by improving your chances of getting the best deal possible?
Check your credit score to put your best foot forward
A credit score check is a solid base to start during the car buying procedure. The decisions of loan lenders are usually based, in part, on credit scores, which take into account a consumer's credit experiences. Check your credit report with TransUnion Canada or Equifax Canada for errors or inaccuracies that could stop a lender from giving you the best rates for your case.
Calculate what you can afford
Before applying, think about what you can afford and what you believe is a manageable budget each month. By doing this, you will have the perfect idea of what is right for you and you can plan accordingly.
- Find a suitable lender
Determining how to get a bad credit auto loan becomes a lot easier when you find a lender who accepts applications from people with bad or a limited credit history. The main choices include car dealerships, banks, credit unions and finance companies. Consider lenders who take consumer demands with all types of credit.
Shop, within 20 to 40 days
Shopping for auto loans lets you compare what different lenders can offer you. A word of advice: Try to limit your shopping within 30 days to avoid further damage to your credit. When a lender checks your credit score for a loan, it has a significant effect by themselves. However, in some cases, the demand for multiple loans over a short period can lower your score. However, depending on the credit score model used(Car loan, mortgage loan etc), inquiries in the 30 day period will count as one claim.
Between arranging the right financing and getting the right vehicle, there is a lot to account for when buying a car with imperfect credit score, especially if you are doing both at the dealership. You can prevent all the stress by getting pre-approved for a car loan earlier. Pre-approved buyers can shop because they are already aware of the terms and conditions of their credit, and only need to concentrate on settling on a reasonable cost for their vehicle.
Negotiate your position
Having a poor credit score doesn’t mean you should settle for a bad deal. You could save money by negotiating some conditions related to the car loan including the interest rates, the annual percentage rate, loan terms, prepayment penalties and any other additional loan charges.
An imperfect credit score isn’t the end of the world, but do not let it keep you from getting what you desire. Grasping how to get a bad credit auto loan is your first step in the right direction.