Bad Credit Auto Loans: Essential Tasks to Help You Succeed
“The automobile has become a secular sanctuary for the individual, his sanctuary to himself, his mobile Walden Pond.” -Edward McDonagh
Cars are not just a means of transportation for us. We love cars and wish we had one that also brings extreme joy and social status. If you are looking for a car, you should focus on getting car loans. It’s because skyrocketing car prices have made it impossible to buy a car with cash.
When you apply for a car loan, your credit score is taken into consideration along with several other factors. If you have a bad credit score, like most people who have suffered through the economic downturn, you will need to be extremely cautious. It’s because a single mistake can result in unnecessarily high interest rates. It can even hurt your chances of improving your credit score. So, here is a list of essential tasks you need to take on to complete the car buying process successfully:
TASK 1: PREPARING FOR AN AUTO LOAN WITH BAD CREDIT
A. Create a budget
Calculate your budget so you don’t buy a car that isn’t in your price range. Setting your spending limit will help you negotiate affordable loan payments with the lender. If you are confused about what income and expenses to consider, you can use the online car loan calculators available in the market.
B. Save for a down payment
Most lenders offer high rates on bad credit auto loans. If you take out a large loan amount, you will have to spend more money on interest. But you can turn this losing situation into a win by making a down payment. The down payment will reduce your loan amount and also help you make lower payments.
But don’t worry if you don’t have the money to make a down payment. You can trade in your old car and avoid paying cash. There is one more alternative to help you avoid down payment and it is called bad credit no down payment auto loan program. You can take advantage of this loan program at slightly higher interest rates.
C. Complete paperwork
Bad credit lenders have become lenient and easy to get approved. Therefore, you will not need additional documents to get auto loans with bad credit. You just have to provide:
1. Proof of identification (SSN)
2. Proof of income (employee verification letter, recent pay stubs)
3. Financial Statements (Bank Data, Tax Information)
4. Utility Bill Receipts
TASK 2 – AUTO LOAN APPLICATION WITH BAD CREDIT
Gone are the days when bad credit car buyers had no place to apply for an auto loan. Today, you can get bad credit auto loans from:
1. Online auto finance companies
2. Car dealers
3. Credit unions
4. Traditional banks and other lenders
Before you start sending out loan applications to everyone, make sure you understand their loan approval criteria and apply with the lender/dealer that suits your needs.
Typically, online companies have the least stringent requirements and a higher pass rate. It’s because they work with a network of subprime lenders and dealers. Thus, they have the advantage of forwarding your application to other lenders if the first one rejects it.
So, find a reputable online auto finance company and apply for the most suitable auto loan option that will improve your credit scores. I hope you are successful in finding the best bad credit auto loan program. My best wishes!