Finance A Car With Bad Credit
Finding and purchasing a new car can be complicated. There’s research, test driving, negotiating with sales people…the list goes on. Depending on your financial situation and credit score, one of the most difficult parts of the process might be financing your vehicle. Many people don’t buy a new vehicle up front, and if you have bad credit, getting approved for a loan can seem virtually impossible. This, however, isn’t necessarily the case. Check out these tips for financing a new vehicle even with bad credit, and don’t let your subpar credit score stand in the way of our new car dreams.
Put more money down: Most of the time, you’re required to put down a few thousand dollars up front when financing a vehicle. Professionals with Coachella Valley Volkswagen tell us that applicants with bad credit can increase their chances of being approved, however by offering to put more money down up front. Not only will this lessen the amount of money you’ll need to be approved for, but it will make you look more financially stable and can go a long way to convincing lenders that your credit score doesn’t reflect your current ability to make loan payments on time.
Offer an explanation: While you may not want to sound like you’re making excuses, offering a valid explanation for bad credit is completely legitimate. You can attach a 100-word statement to the credit file that is sent along with credit inquiry, so feel free to explain if an unforeseen circumstance like a medical emergency had a negative impact on your financial situation and credit score. Don’t be afraid to give context to your credit score, it can make all the difference in the eyes of a lender.
Don’t hide repaid debts: Often times, people will hurry to expunge old debts from their record as soon as they’re paid off. What they may not realize, though, is that old debts that were repaid in a consistent and timely fashion actually look good on your credit report. If you’ve paid off student loans or your old car and made your payments on time, leave that on your record. It will stand as proof that you’re capable and responsible.
Look into credit unions: Unlike commercial banks, credit unions are nonprofit institutions that are owned by their members, so they’re able to offer lower fees and borrowing costs. Another benefit of credit unions is that they generally function like a small community bank, and put more time and effort into getting to know their members. With this more intimate, community-oriented atmosphere and without the pressure to create profits for shareholders, credit unions will often approve loan applicants even when they have bad credit.
Get a co-signer: Even if you can’t get approved on your own, many lenders will still consider you if you can find a co-signer for the loan. A family member or close friend with good credit can sign on with you and help you get approval, but make sure that if you do get a co-signer you stay on top of your payments. Being late on repayment or defaulting will not only negatively affect your credit, but also theirs.
Financing a car with bad credit can definitely require some extra legwork, but it doesn’t have to be impossible. Don’t give up; use these tips and tricks to get approved despite your bad credit.