Bad credit doesn't necessary mean you can't obtain a new-car loan with a reasonable rate or that you even have bad credit at all, which is determined by possible lenders. Banks take many aspects of your life into account for loan approvals, including revolving accounts and history, mortgage payments, time on the job and time at your address. Learn what you can do to obtain a new-car loan.
Credit Standing
Obtain a copy of your credit report from the Annual Credit Report website, which provides a free report from each of the three major credit bureaus once a year. Go over your credit report and determine whether or not you have any revolving accounts past due. A revolving account includes credit cards, mortgages and loans. If you do have accounts recently past due, catch up with your payments before applying for a new-car loan. If you can take care of any other negative items on your credit report, do so before applying. Keep receipts for any payments you make to provide to a dealership at the time you apply for new-car financing.
Required Information
Some banks are more lenient with credit delinquencies than others. If you have a long-term job with decent pay and a stable, long-term address, you are more likely to obtain a new-car loan than someone who may have a better credit score but an inconsistent address and employment history. You can expect to provide a variety of information to the dealership for a new-car loan. In addition to any payment receipts you've obtained, bring your most recent paystub to prove your year-to-date income. If you are self-employed, bring in your last two years of tax returns to prove your income. Bring proof of residency, which includes a recent bill for a utility service, such as water, electric or cable. Do not bring in a final notice. Have your license with you and compile a list of five references, which is used for bank contact in case you default on your loan. Have names, addresses and phone numbers ready. Not all borrowers require you to supply this information, but it is common. Determine how much money you can put down towards the loan and make sure your funds are available before going to the dealership.
Work With a Dealership
Work with a dealership. Start your buying process in the beginning of the month to allow the dealership some time to work on your car loan. Dealerships want to sell cars and give themselves until the end of each month to reach quotas. Many dealers have established relationships with banks they use frequently. However, if your credit is poor to bad, the dealership may need time to contact and work with its resources to obtain your loan. Let your salesperson know that you believe you have bad credit, as the dealer may have to base your new car options on rebates or price, depending on possible approvals. You may have to be open to other possibilities. For example, if the dealership can secure your loan, the bank may require you put down several thousand dollars. The dealer will work with you to find a car that has rebates (immediate money off) that can also be discounted in addition to your money down, allowing for a loan approval.
No comments:
Post a Comment