So, your credit’s not the best. A couple things happened, you were late on some payments. Now you’ve got some credit issues. Iffy credit is not the same as bad credit, but in the eyes of a lender, they are both high risk issues. Which is why you need a lender who will be willing to give you a higher risk car loan.
Now is a really great time to buy a new car, truck or SUV. The problem is that lots of people have dinged up credit. Now more than ever, lenders are catering to people with the same issues as you and offering bad credit car loans. We see the commercials all the time – dealerships telling you that if you have a job and $147.00, they can get you in a vehicle. If you need a car and you have credit problems, you should be taking advantage of these offers.
There are a few things you need to know, though, before you head off to get your auto loan.
– As with all loans, shop around. If you’re considering going through a car dealership, make sure they have a decent inventory in the price range you think you’ll be looking. You don’t want to be pre-approved for a certain amount only to find the dealership’s selection in that range is severely limited. Don’t accept a loan with an interest rate of more than 9.5%. Even with bad credit, you shouldn’t have to pay more than that.
– Don’t always fall for the deals. In certain parts of the country, dealerships are making deals to sell off their existing inventory, which can mean big savings for you. One dealership in Northern Illinois was offering a “buy one, get one for $1” deal. In other words, if you bought one new vehicle, you could get a second used car for just a dollar extra. While this can be a great deal if you have great credit, you may find that you’re overextending your budget if you take advantage of the deal, which may involve purchasing a more expensive new car.
– Be aware of what your lender will expect of you. If you’re shopping online especially, it’s really important to know if your lender has terms and conditions. They might only be willing to lend you a certain amount on a new vehicle, as the risk of your brand new truck breaking down is substantially lower than that of a four year old Chevy. Understand that to a lender, this lowers the risk to them, because if they’re in a position where they have to repossess your vehicle, it will be more sellable and likely in better condition.
– Be ready to put some money down on your new SUV. Or car, or truck. In bad credit situations, a potential lender will take your request more seriously if they see you’ve taken the time to save up a decent down payment. If you’ve got $1000 to spare, it’s a good idea to use it. This will help your chances of getting a bad credit car loan and it will help to reduce the cost of the loan in the long term.
Most of all, don’t set your sights too high or get too discouraged. You may find that you need to apply with several different lenders to get an auto loan to fit your bad credit situation. Don’t give up. Depending on the severity of your credit, there will be someone willing to finance you.