Are you having difficulty in securing a loan for the purchase of a new car? If so, then you should check your credit record. Maybe in your past credit arrangements, you failed to establish a good rating to your creditors. Bad credit record will really make it difficult for you to secure a car loan. It is the first thing lenders will check if you will apply for such loan. Most of the time, the loan application of people with poor credit are turned down. You will ask yourself “How can I get an auto loan if I have the worst credit record?” Securing a Bad Credit Car Loan The good news is that even if you have such poor credit, it does not mean that you cannot buy the new car you hope to have.
There are lenders out there who are offering loans for those people with bad credit. However, expect that the worst. Due to your credit record, your loan might be approved but imposed with a higher interest rate. You will also be dealing with fewer options this time. It is because these lenders do make sure that their investment will return.
Acquiring such a loan will also depend on whether you have other properties as collateral that can be foreclosed once you fail to pay up. If you have your own home, you can have a chance of getting a loan to buy that new car. Always remember that failure to pay your loans will result in foreclosure of your home by your creditor. Here are some pointers that can help you in case you are in need of a new car yet you have that terrible credit record. • Check your credit situation. For instance, you have a credit score (also known as FICO) of 500, then it may not be wise to get a car loan. If you will get a loan with this score, you will just end up paying twice the cost of a new car after interest and other fees. • If you really have that poor credit, it is advisable that you consolidate your debts so that you can decrease the interest rate you have to adhere to on each payment. • You also consider getting a good co-signer to increase your chance of securing a car loan. However, he must have great credit because he will be responsible for the repayment of the loan in case if you fail to do so.
• Make sure your monthly income is not lower than $1,200. Creditors usually impose no more than 20 percent of your income as interest payment for your loan. • You can also consider extending the length of your loan to lower your payments. However, the longer the period of payment is, the more you will pay in overall interest. • Have your financial plans pre-arranged with car dealers? They can offer you packages to reduce the impact of high-interest rates during the payment of your car loan. When you have secured your car loan, the best thing to do next is to re-establish your faulty credit rating. It can be a huge factor in gaining back points towards your credit. You will not only enjoy your new car, but you will also be able to pull yourself off from that bad credit situation. Remember that once you have failed on your new car loan, owning a car will just be a dream.