Getting auto financing for your dream car is not supposed to be a big deal. However, if you have bad credit, it could make a simple process quite difficult. You quickly find that with bad credit, lenders aren’t particularly opening their arms wide to offer you auto financing. Don’t worry so much, there are many lenders and car dealerships that are willing to help customers with bad credit.
Usually, your credit score is a key decider whether you get approved or rejected for auto financing, mortgage or a personal loan. That is why your credit history is important to you. If your credit score isn’t the best, you definitely need to improve it for your financial well-being. While you are still fixing your credit, there are still many lenders and auto dealers that will help you get approved for auto financing. The regular payments you would be making to settle your car loan is also an effective way to improve your credit too so it’s a win-win for you.
If you are looking to get auto financing and you have bad credit, there are a number of tips that can help you get a vehicle.
Get familiar with your credit history
The first thing you should do as someone with bad credit is to first of all know what your current credit score is. There are many online resources that will help you get a free credit report and tell you your credit score. These websites also tell you what is affecting your credit such as late payments, delinquent payment and other things. Go through the credit report and identify items that you can fix quickly. Doing this before car shopping puts you in a better position to be a good candidate for auto financing. It also improves the terms that lenders will offer you.
Understand the auto financing process and its important terms
One of the worst things that can happen to you is to be caught unawares when you are talking a lender about a potential auto financing offer. Go online and read about important terms like the Annual Percentage Rate (APR), the loan terms, add-ons and payment period. You should try to find out what the average price of the car you want is if you were paying outright. This will help you to know if you have a good offer or not. Here is more information on how you can secure vehicle financing
Have many financing options
When you start looking for a car, talk to as many lenders as possible. Specifically search online for lenders that offer special auto financing programs for people with bad credit. Chances are you will be able to find a great deal that has a high chance of approval. You should also be upfront about your situation and get quotes to compare. You should be safe too and don’t let lenders keep running hard credit checks on you. Hard credit checks tell the credit bureaus that you are in the process of taking on more debt so they can reduce your credit score. Find many options, have a shortlist and visit with your top three options.
Visit your bank and try to get pre-qualified
While it may not be your first or obvious choice, you should go to your bank and speak to a financial consultant. Because you have banking history with them, they may be able to find you a loan that is suitable to your needs. Credit unions are more amenable to giving auto financing to people with bad credit so be sure to visit one and register where possible.
Confirm that your agreed terms are final and locked in
When you’re talking to a dealer about buying a used car through auto financing and they offer you terms, make sure the rates and terms are final. Do not sign anything that can change due to some vague conditions. This is a common scam that dishonest dealers use to suck in people with bad credit. They offer them a deal and get them signing before introducing other fees, charges and conditions that force the buyer to go with higher interest rates. Have a firm commitment before signing anything.
Save for a down payment
Because you have bad credit, lenders and dealers may be unwilling to give you all the auto financing that you want. An easy way to make your chances higher is to save up for a down payment towards the car so that your monthly payments are lower. By paying off part of the total price upfront, you are showing your seriousness and asking for a smaller loan which is easier for lenders to approve.
Get a cosigner
Two heads are usually better than one and this rings true when you have bad credit. You can ask trusted friends or family members to share the responsibility of your loan with you. When you have a cosigner with good credit on your application, your chances of approval increase drastically. The cosigner is more creditworthy, so the lender is more comfortable to take on the risk of the auto financing loan.
No doubt, there is some worry when you need auto financing and have bad credit but don’t despair. It is not impossible to get a car of your choice regardless of your credit. Be creative, do your research and check all your options. Paying a down payment or having a cosigner will make your life easier. Give yourself time to get ready and you would be driving the car of your dreams in no time. Apply today with us today, we believe in affordable payments and fair rates for all Canadians across Canada