Tips for Getting a Bad Credit Auto Loan
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Many people who have bad credit think that there is no way that they could ever buy a car. However, this is really not the case as getting a bad credit auto loan is not as difficult as one may think. Like everything in life, “bad” is left to interpretation. Some lenders will look at borderline credit scores in a different way than others. There are some banks who consider someone with borderline credit as a good prospect while other financial institutions may use different criteria and see it as a bigger risk.
The most important thing that you can do if you are trying to obtain a bad credit auto loan is to shop around. You will need to consider several options for loans if you want to get the best possible deal. Some financial institutes may offer you a lower rate than others so if you want to get the best payment option you will need to do a bit of research before signing any documents.
Pull your Credit Reports
You can pull your 3 free credit reports by using AnnualCreditReport.com. Go over the report and determine whether or not it is accurate. If it is, you need to call the financial institutions to get these things corrected. If you can, pay off any bad debt before you attempt to get a loan as this will increase your chances of being approved and it will also increase your chances of obtaining a better interest rate.
You will also want to pay to get a copy of your credit score. Most financial institutions are going to look at that number to determine how much your interest rate should be. The higher your score the better of course, but even if you have a low score it does not mean that you will not be able to obtain an auto loan at all.
Many people do not realize that getting a bad credit auto loan is much easier than getting a mortgage or any other type of loan. The reason for this is because auto loans are for a shorter amount of time and are for a lesser amount of money. The same credit score that puts you in a subprime mortgage could be a prime or close to the prime rate for an auto loan. Just remember, stay within your budget and you may just be surprised at the rate that you can get for your auto loan.
Choose your Car Dealer Wisely
It is typically going to be best to purchase a car from a dealer that is close to you. In addition, you may want to consider using a credit union or similar institution for your loan as they are more likely to provide you with approval. Buy Here Pay Here car dealerships are also a great option to get a bad credit auto loan as many of these places specialize in providing consumers with bad or no credit with the loans that they need to purchase a vehicle.