If you have bad credit, it can affect your ability to obtain all kinds of credit including a home mortgage, credit cards and a car loan. Poor credit may signify your inability to repay a loan to a lender, and it makes you appear to be a greater credit risk. Even with this obstacle, if you are in the market for a new car, you may be able to get a car loan even with bad credit.
Check Your Credit
Assessing your credit situation is an important first step. ConsumerAffairs.com suggests you order a copy of your credit report from each of the three major credit bureaus: TransUnion, Equifax and Experian. Review your credit scores to see where you stand. Generally, anything over 700 is considered good credit eligible for the best rates. If your score is under 500, you may need to spend some time improving your credit before a lender will lend to you. If you notice any inaccuracies on your credit report that may be dragging your scores down, send a certified letter to each of the reporting bureaus to request correction. Request an updated report reflecting the corrections.
Bad Credit Loans
Even if you do have poor credit, many lenders and automotive financing companies specialize in loans for consumers with damaged credit. Companies like CarsDirect.com specialize in connecting consumers with lenders that offer financing for both used and new cars even if you have had a history of late payments, judgments, liens and even bankruptcy. You may also be able to obtain a loan even with poor credit from your local bank or credit union. You should be aware, however, that you will likely be required to pay a higher interest rate on the loan due to your poor credit scores. Some lenders may also charge additional fees on the loan to help cover their costs in case you default.
Refinance Your Loan
Once you obtain a car loan, you may be eligible to improve your situation down the road. Make all of your payments on time for at least six to 12 months. After you have established a solid history of payments, you can apply for an auto loan refinance. A refinance may give you the opportunity to lower your interest rates and thereby lower your monthly payments to pay off the loan sooner. A refinance may also allow you to lower your payments further by extending the terms of your loan and stretching the payments out over a longer period.
0 comments:
Post a Comment