Are you needing bad credit car financing but just don’t know how to go about getting that type of loan. This article offers tips and should help you get an auto loan when you know your credit score is not good enough to get a conventional auto loan. The economy the way it is right now has caused lenders to really tighten their lending requirements. And because of the weak job market we all unfortunately miss a payment here or there that can leave an ugly black mark on your credit score and quickly label you as a bad credit risk. . Due to this you might have trouble getting a conventional auto loan at a good interest rate. No need to worry as there is hope.
Here are a few things you can do that should help you get bad credit car financing. You obviously will have to jump through a few more hoops that other and the interest rate you pay will be higher than average but it won’t be as high as the interest rate you will pay at the auto dealer ship. The reason it won’t be as high as the auto dealer is that we are going through them to get that bad credit auto loan.
Let’s go over the steps you need to take to get bad credit car financing.
One of the first steps I recommend is that you go shopping for your car first. Go over to some of the auto sites and do some research on the car you want to buy. Once you’ve made your selection and have decided on a vehicle find out what the invoice price of that vehicle really is. Sites like Edmunds.com can provide that information to you and the information is available for free.
Now that you have the information, especially the invoice price, go to several dealerships and talk to the salespeople. Negotiate the best pricing for the vehicle you select. It’s important here that you don’t let them know you will not be using them for your auto financing. Let them keep thinking that. If they ask just say that maybe you will use them, but that at the moment you are not sure. Use one dealer against the other to get the lowest possible price that you can get for the vehicle of your choice.
Once you know what you will be paying go to an outside source to apply for a loan. There are loan companies out there that specialize in bad credit auto financing. These companies know the risk involved in lending money to folks with bad credit so they will usually ask you for more documentation than usual, they may ask for more of a down payment, and might even ask you to get a co-signer for your bad credit loan. Just don’t be upset with all of their questions and requirements as you need to remember that these bad credit loan companies are businesses that need to make money and minimize risk.
You interest rate on your bad credit auto finance will usually be higher than a conventional loan but in all likelihood lower than the auto dealer. The reason is simple, auto dealers mark up loan interest to make more profit. That is why they sometimes will bottom line you on the price of the car because they make it up by increasing the interest the bank gives them by 2-3 percentage points. You will have avoided all of that by getting your bad credit financing from somewhere outside of the auto dealership.
Once you have received approval for your auto loan go back to the dealership to purchase your vehicle. Here is where you need to have nerves of steel. Here are a few things to keep in mind.
Don’t budge or negotiate on the price you have already decided on.
Do not accept any extend warranties you can buy them later at a much cheaper price.
If they insist on trying to finance you through their program simply say “No”.
If they start playing game or messing around simply walk out. Chances are they will stop and call you back in.
After you have completed your transaction you will start getting monthly invoices for your auto loan. Make sure you make your payments on time,every time.
In closing keep in mind not everyone can get a nice conventional car loan. If you are one of the many thousands who simply don’t have the stellar credit and have a few bad mark on your credit score and then bad credit car financing might be your only and best option.
Comments on this entry are closed.