Securing car finance can be a real pain. It’s especially difficult if you have a poor credit background but don’t give up hope if you’ve got your eye on a vehicle. Bad credit car finance may seem difficult to obtain but if you follow the right steps you will be well on the way to getting that loan.
In this guide, you will discover several similar tips that are based on real-life experience and will help you raise your odds of getting approved.
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Tips For Securing Car Finance
Tip #1 — Understand Your Credit Report
You need to know your credit score before you even think of applying for a car loan. You can get a copy of your credit report and check for mistakes. That so-called score is often affected by inaccuracies. So, you should always be ready to challenge any inconsistencies.
If you know what’s in your credit report, you’re better equipped to deal with it and make the necessary improvements.
Tip #2 — Improve Your Credit Score
It wont be easy but it will take some time for you to increase your belwo score and then you will be able to get the best rate on the loan. To start with you can pay all your debts which are affecting your credit score and make sure that all your payments are made on time.
After that, do not apply for any new credit at all. For that will generate more entries on your credit report and that’s not good. A little bit of hike in your credit score can pose a lot of difference in seeking loans.
Tip #3 — Save for a Larger Down Payment
A large down payment tells the lender that you’re a serious buyer and financially stable. Try to save at least 20 per cent of the car price.
The larger your down payment, the less your request to borrow; and as a result, you will be a better candidate with any of the lenders. This also has the spin-off of being eligible for the superior loan terms and lower interest rates charged for your loan.
Tip #4 — Consider a Co-Signer
if your credit record isn’t very good in certain cases you have to help yourself because of your credit standing, you can get yourself a co-signer who has good credit, and that will help you get a loan.
And a co-signer is someone who signs with you and is willing to make payments on the loan should you not pay off the loan. This makes the chances of giving you money to the person lending it to you less of a risk.
With a co-signer, you strengthen your application, perhaps getting the loan – with a reduced interest rate. Your co-signer needs to know what they are agreeing to do for you, so do ask.
Tip #5 — Explore Different Lenders
Lenders are one of a kind. The lenders will only lend people who have bad credit history. So compare and choose the best deal from other lenders. Banks, credit unions, and other online lenders can be your top choice.
Be careful of compromise companies. Look for companies with good policies and good practices.
Tip #6 — Get Pre-Approved
According to CarMoney, one of the key steps toward car buying is to secure a loan in advance. So, it is advisable to know your financial limit by going to a bank for loan approval before visiting auto showrooms.
It helps the buyers to negotiate with dealers at the auto showrooms because the sellers are aware of them having a reasonable amount of money.
This is another reason why it helps so much to get pre-approved: you know how much money you can physically play with. In addition to helping to avoid a waste of time, knowing what you can borrow will decrease the inevitable anxiousness, ambiguity and stress you will experience at each different dealer you visit.
Tip #7 — Be Realistic About Your Budget
Try to remain sensible here, don’t succumb to choosing an option above and beyond what you can afford because you have bad credit. Choose what you can afford based on how much you can actually spend each month – the car, insurance, fuel, tax and MOT. And so on.
Be wary of how easily enthusiasm can go astray.Trying to bust your budget to the max will inevitably lead you to living beyond your means, whereas adhering to your budget (keeping it stretched slightly, which will help you meet your loans commitments) will only put you in your proper financial position.
Tip #8 — Negotiate the Loan Terms
Don’t be shy to ask the lender for more favourable loan conditions. Make them specify interest rates, the total duration of the loan and any other conditions. Smallest changes can save you a lot of money for the whole loan duration.
Readiness to barter shows to lenders you’re a cash-savvy, deliberate grownup.
