Having a bad credit is bad news especially if you are trying to take out a car loan. Most banks would simply deny your application, even without explanation, the moment they see a negative mark on your credit file. Nonetheless, this doesn’t also mean you will have to settle for keeping your dream car at bay. With technology at the tip of our fingers, you can actually shop for the right financing that can work with your financial situation. Closing a car loan application has become an arms reach away.
With new loan companies being established almost frequently, you can get a car loan that works with your particular situation. Their goal is to work side by side with consumers who have tarnished credit, to enable them to drive the car that meets their needs without settling for something less.
5 Things to Consider Before Buying A Car With Bad Credit
There are a few things that you will have to consider before pursuing an auto loan with bad credit.
1. Your credit track record and amount of deposit directly impacts the interest rate associated with your auto loan. You can expect to have higher interest rates with bad credit auto loans.
2. The newly imposed Comprehensive Credit Reporting may improve your chances of getting better deals and interest for your car loan. However, it still depends on the positive items on your credit report. Even with bad credit car loan applications, a good review on your credit file will always be favorable for your application.
3. Longer loan terms. Note that lenders are willing to extend loan terms in order to meet the consumers paying needs. However, longer loan term means higher loan costs in interests and other associated fees.
4. Most lenders require a minimum income requirement though it varies from lender to lender. Also, your source of income should be regular and reliable. Make sure to check the borrower standards and criteria before submitting an application.
5. Bankruptcy cases. The majority of bad credit car loan companies necessitate bankruptcy cases to be released via the court prior to loan application.
No Money Down Bad Credit Auto Loan – 5 Tips To Qualify
No money down car loans is also known as zero down or no cash down cash loans. These loans are easily available to borrowers with good credit score. But there are loan companies who extend car loans with bad credit and no money down. These lenders understand that not all those who have bad credit can put up a down payment but can make monthly repayments for their loans.
To qualify for a no money down loan, the borrower will have to provide proof of income to ensure that they are able to make payments. Below are some factors that lenders are looking at to consider you for a no money down auto loan.
1. Regular employment with proof of solid income.
2. Years of stay at your current residence.
3. Well maintained personal bank account with regular deposits
4. Small lines of credit under your name showing regular and on-time payments.
5. Up to date payments on bills and other utilities
Lenders would like to see a regular and steady employment to make sure you can make regular payments. The Comprehensive Credit Reporting program will help you a lot in this area of your finances. Your years of stay in your current address shows that you can be trusted. This makes it easier for a lender to reach you in case of any default. A well maintained personal bank account shows lenders that you are able to manage your money and at the same time set aside some amount for savings. Smaller lines of credit indicate good paying habits.
