So you have a negative credit score, and you’re being turned down anywhere you apply for a loan. Many people have been in this situation, but don’t think it’s the end of the road for you—it’s not. There are still institutions today that give another chance to those who have had to deal with loan payment failure due to unwanted circumstances. All you need is to know where to look.
If you’re planning to get a car loan but you have bad credit, you might encounter several challenges. But, you can still get one given the right amount of research and patience. Below are some things that you can do to increase your chances of getting a car loan despite a negative credit rating:
- Show proof that you have the ability to pay off the loan.
One of the first things you can do to get approved is to agree to pay a large deposit or down payment for the car you’re planning to get. This means your remaining balance will be lower and you’re more likely to afford it.
In some instances, you might have to shoulder a higher interest rate than usual. While this may be normal due to the perceived risk that the dealership is taking, be sure you look for a rate that is reasonable and within your budget—one that you can pay off regularly in order to restore your positive credit rating.
- Look for other car loan options.
If you get a car loan with bad credit, expect most traditional loan and bank institutions to shake their head and say no. But, what you need to remember is that these are not the only institutions from which you can get a car loan. You have other options.
Try looking into credit unions—it will be helpful if you’re already a member of one. You can also turn to a dealer that specializes in handling cases of bad credit. These kinds of dealership will have more experience and confidence in handling such cases, so they’re less likely to charge a hefty amount due to perceived risk. Important tip: read reviews before you go for any dealership.
- Find ways to cut on cost.
Next to getting a car, your second priority when getting a car loan is to repair your credit rating. Therefore, you must focus all your resources into paying the loan. Be sure you don’t spend more than you can pay off at the onset. There are some things you can do to minimize your expense:
- Choose a used car. This will be cheaper compared to a brand new car, so it’s easier to pay off the loan. Just remember to find a reputable used car dealership to ensure that you won’t get ripped off.
- Minimize on add-ons. Save for a basic warranty (which you can also get for free if you can negotiate), you might want to avoid add-ons that many dealerships will try to talk you into getting. Just say no, and be firm about it.
With these tips, getting a car loan with bad credit should be achievable and easy. With the right dealership and the right mindset, you’ll be on your way to getting approved and to having your credit rating restored.