Buying a car will involve spending more money than many of us have ever had in one place, and even the most financially savvy of us can be profoundly intimidated by that. And if you’re dealing with bad credit, that can just add to the worry and concern. Here’s how to secure financing for your car with bad credit.
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Financing First, Car Second
First of all, it’s important to remember that you’re buying two separate products when you buy a car. There’s the car itself, of course, but there’s also the financing for the car. You buy it over time, by paying interest on the amount of money you borrow. Keeping that in mind will help you ensure that you get a better deal.
You might be wondering if getting a car loan with bad credit is even possible, especially if you’ve applied for credit cards or a mortgage and been rejected. Many believe that there aren’t many lenders for those with bad credit, but auto loans have more lender support than other classes of financial product, and the market has shifted with need. The tough economy has shown many lenders that while many people have suffered a financial setback, they’re still reliable borrowers, they just have a bad credit score.
Still, there are some steps you should take to ensure you get the best possible loan, and most of them are simple common sense.
Bad credit? No credit? Federal Auto Loan can help!
Getting A Better Car Loan
First, before you apply, clean up your credit report where you can; pay off debt, and check your report for any possible errors. It’s a simple thing to do, but it can be surprising just how effective it is in terms of boosting your credit score. It won’t change bad credit into good, but even just a few points can make a surprisingly large difference.
Next, work out your budget and the monthly payment you can afford. Be sure to leave room in your budget to deal with emergencies and other problems, so that you’re not living paycheck to paycheck. This will also tell you what car makes sense for your budget.
After that, you should comparison shop for bad credit auto financing. Don’t assume the first loan you get will be the only one; you should be able to get several quotes from different lenders. Look carefully at how much they’ll loan you and the terms of that loan. Ideally, you want to borrow as little as possible at the lowest interest rate possible on the shortest timeframe possible, as that will maximize your investment.
And finally, after that, then you should buy the car. Having the financing in hand will both simplify the process considerably and help you choose a car that makes sense for both your needs and your budget.
The key lesson is that getting a car loan with bad credit is not just possible, it’s relatively easy. All you have to do, in the end, is be prepared for the process … and be your own best advocate.
Get the car you need with Federal Auto Loan!