There are reasons why you always see those ads on television that tell you to watch your credit score and make sure it looks good. Good credit is one of the keys to getting approved for loans both personal and business, and auto financing is the one of the biggest loans you need to keep your credit score up to be approved for. But unfortunately, not everyone can say their credit scores are good, and if you’ve had some financial difficulty and are worried about approval for a new car loan, you might be too afraid to apply for one. The good news is there are still options out there for bad credit auto loans; you just need to know where to find them.
Auto Loans Are Not the Same as Home Loans
One thing that this Bankrate article reminds readers of is that having a credit score that’s considered bad by mortgage lenders may not be considered bad by auto loan lenders. Even if you know your credit score and you think it means bad terms, don’t just walk into a dealership or bank assuming that’s what you’re going to get. Many of them have financing options even for borrowers with bad credit, and they might have other agreements that can lower your monthly payments. You may also get approved for auto financing if you offer to make a larger down payment than what the dealer is expecting.
There Are Other Lenders Out There Besides Banks
It used to be that banks and credit unions were the only places you would consider going to get legitimate auto loans, but that’s not the case today. In today’s world, you can go to many other alternative lenders such as peer-to-peer lenders, merchant cash advance services if you own a business, and other non-traditional financing sources. Many of these alternative lenders will work with people who have bad credit scores and don’t have too many other places to turn. You do need to be careful not to get scammed or signup for predatory loans such as payday loans or installment loans because these will charge you interest rates that will trap you in huge debt.
Your Strategy for Getting Your Credit Score Back Up
When you get approved for a bad credit car loan or even if you’re waiting on that, you should be focused on improving your credit score. One of the first ways to do that is to look at your credit report and if there are errors on it, get them resolved because that could fix your score in a hurry. You also need to make sure you start paying down your other credit card balances and following a strategy to pay your auto loan on schedule. Bad credit may be something you’re stuck with now, but it doesn’t have to remain with you.
The bottom line is bad credit doesn’t mean you shouldn’t do thorough shopping because it’s still possible to get the best loan terms with any credit. You need to beware of any catches or honey pots directed at bad credit customers, and before your signoff on loan terms, make sure they are final. But if you aren’t sure how to find the best bad credit car loans, don’t be afraid to consult a professional.