A car loan is a good way for individuals with bad credit to make a fresh start and re-establish a positive credit history. A combination of factors contribute to a low credit score. However, you have the power to change your current credit status. For some, improving credit may be a simple matter. Their status may simply require paying overdue bills and reconciling collection accounts. On the other hand, if bankruptcy or repossession damages your credit score, consider getting a car loan to improve your rating.
Get pre-approved for a car loan
Before you begin your search for a new or used car, it may be helpful to get pre-approved for a car loan. Accepting trade finance with bad credit may not be the wisest option. Most agents offer financing to individuals with poor credit. However, agents do not specialize in bad credit loans and therefore will not offer the best rate.
To ensure a fair interest rate, secure your financing before negotiating with the agent. Getting pre-approved for a car loan is easy. Simply complete your online car loan application. The lender will review your balance and transfer a quote that includes your approval amount. This is perfect for a quick car buying experience, and a great way to avoid dealership scams.
Compare car loan lenders
Pre-approvals occur after you complete the application with the lender. However, before choosing a car loan lender, it is important to get car loan quotes from various lenders. Quotes are non-binding and do not require credit checks.
If you have bad credit, it would be helpful to review your credit score before applying. The Request for Quote will ask applicants to provide an accurate credit standing. This plays a big role in the rate and estimated terms offered by the lenders. Once you've reviewed all bids, choose the best bid, and complete a formal application for pre-approval.
Apply for a car loan with a large down payment
Although it is possible to get a car loan with bad credit, we do not promise you the best car loan rate. To increase the likelihood of getting a slightly lower rate, apply for a car loan with a down payment. The typical down payment is about 10% of the purchase price.