You need a new car. However, your credit score is not as high as it could be. Is it still possible to get a car loan? Yes, but the monthly payments may be higher. A car loan may not be out of reach, and you could find one that works within your monthly budget.
In fact, getting a car loan and paying it consistently can help improve your credit. These tips can help you achieve this even with a low credit score:
Check Your Credit
Start early by checking your credit reports and scores. If you’re planning on purchasing a vehicle in the future, work on improving your credit score. Pay the bills on time and pay off missed or late payments. By reducing your debt as much as possible, you can improve your credit utilization ratio (it’s best to keep it under 30%). If you find any errors or inaccuracies in your credit report, contact a credit bureau such as Experian, Equifax, or TransUnion.
Do Your Research
Understand key terms such as the Annual Percentage Rate (APR) and look into the typical APRs for cars and auto loans like the one you’re considering. Also, research auto lenders, some which serve people with poor credit. The interest rates may be higher, but you can possibly afford to get the car you want without waiting. Experian even works with select auto lenders to help people with bad credit.
Shop Around for Lenders
Don’t stop looking after finding just one lender. There are many kinds, and you may find multiple lenders competing for your business if you do it right. Visit at least three different lenders, but don’t draw out the process. Hard credit checks over time can make negotiating the terms of a loan difficult, as each credit check shows you’re preparing to take on more debt.
Save Up for a Down Payment
If you can put a reasonable sum down on a car loan, you might get better interest rates, pay less monthly, or shorten the term of the loan. A down payment also enables the lender to weight the risk of lending you money, even if you have poor credit. Your efforts at saving may also improve your odds of getting approved.
Start searching for a loan with your bank or credit union. There may be more wiggle room for negotiation. Banks often turn down people with poor credit scores. But make some contacts at your bank and someone might be willing to work with you. Credit unions may be more likely to approve you for a loan, so it can help to become a member.
Other ways to get a car loan with bad credit include:
- Don’t sign off on the loan unless the terms are final; otherwise, your monthly payments or down payment may increase later.
- Get a cosigner on the loan; if they have a better credit score, they can guarantee the lender they’ll pay the debt if you don’t.
- Find a buy here, pay here dealer; these dealers finance car purchases and tend to be quite flexible if you agree to their terms.
Get Financed at CarWorld
CarWorld is a premier buy here, pay here used car dealer in Hawthorne, CA. We sell high-quality, low-mileage vehicles inspected to ensure they’re in great condition—and can help finance your purchase. Our convenient financing options are easy to apply for. For the best prices in the region and assistance with financing, visit our dealership or call 833-219-9951.