For many of us, we know what a credit score is, but not our own credit score or how it’s formed. Or, for that matter, how it might be affecting our ability to pay for the tools we need, such as a car to get to work. Here’s what you need to know about bad credit car loans: What they are, how to get them, and how to find the right one.
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The Bad Credit Auto Loan And Your Credit Score
First of all, it’s worth remembering that the credit score is no longer the be-all and end-all of securing bad credit auto financing. The credit score is an incredibly popular tool and it will be looked at. But over the last few years, as the economy has slowly turned around, lenders in the “subprime” auto loan sector have developed a new understanding of their customers and new methods of evaluating them. Lenders actively work to sort out borrowers who are recovering from a personal setback from those with consistent credit problems, such as proving you have a consistent income with tax returns or listening to your personal history.
That said, though, there’s still the fact of the matter that they need to limit risk. So it becomes a question, for the consumer looking for a bad credit car loan, of finding the right loan for your budget that fits your personal financial criteria.
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Finding The Right Loan For You
The best possible loan is the one where you borrow the least, at the lowest interest rate, and pay it off in the shortest amount of time. This also has to be balanced against what you can afford.
The first step is to work on your budget and see what fits into it for a monthly car payment. Realistically, you shouldn’t be borrowing more car than you can afford. Next, you should request your credit report; under the law, you can request one copy of your credit report, for free, from each of the main three credit bureaus. Check it over carefully, looking for any errors or mistakes that might be reducing your overall score. Even just a few points can really help with securing the best possible financing.
Once you have that, it’s time to compare your options. There are more and more lenders in the bad credit auto financing market all the time, and each will weigh the different factors that go into a loan application in many different ways. As a result, you can get very different quotes from a variety of different lenders. That makes it crucial to comparison shop between lenders, looking for the best possible deal.
The most important point to remember, when looking for a bad credit car loan, is that you don’t have to settle for the first loan that comes along. There are so many lenders, and so many people looking for a bad credit car loan, that if you need a car, you’ll be able to find the car you need at the price you want.