Tips for getting a car loan with bad or no credit

Tuesday, October 23, 2018 1:30 p.m. /

If you have less than perfect credit or no credit, you may be wondering how you will get your auto loan approved.

High interest rates and heavy monthly obligations may have scared you off. With a little preparation, getting a car loan with unfavorable credit scores or no credit score is actually possible.

Follow this informative guide to educate yourself.

Get a car loan if you have a bad credit score

Get your credit report

Getting the credit report can give you a complete picture of your status and can also help you find any errors that may appear on your reports. After that, you can resolve all these complications before approaching loan companies. All 3 credit reporting agencies offer free reports every year.

Make all payments for various other bills

Before you go auto loan shopping, try to pay off all your other debts on a timely basis for at least 6 months. While this won’t have a big impact on credit rating, it will make it clear to lenders that you’ve been responsible lately and can help you get credit.

Seek advice from the insurer

Some insurers offer loans. Ask their advice because, like banking institutions, they are more inclined to treat their own customers more positively.

Refinance auto loan

After 12 months of monthly payments on the loan, you can try to have it refinanced. This is especially helpful if your financial situation or credit score has improved significantly since you got your loan. Plus, lowering the monthly interest to 1% can help you save a lot of money over time.

Get a car loan if you have a zero credit score

Gather records and documents

You may need a copy of bank statement, proof of occupancy and any type of paid bills such as utility or telephone bills. Most of them will clearly show the loan provider that you can make your car loan payments.

Find a co-signer

A co-signer can take care of your monthly payments. You must be very aware of the particular risk incurred by the co-signer. If you don’t repay your loan, it’s your co-signer’s responsibility to do so or their credit score will be compromised. It is important to have a decent relationship with the co-signer and to treat your loan with respect.

Ask Car Dealers Next

If the loan company is unable to provide you with a loan, ask the car dealership you plan to buy your car from and what type of car loan options they offer. A car dealership is quite prone to trying to get a car loan on your behalf in order to make a profit. Remember that a loan from a car dealership will normally cost you more than a loan from the bank.

Make monthly payments on time

After getting your auto loan, always try to make your monthly payments by the due date. This is your first key entry into your credit rating, and a good start can sooner or later lead to a much better credit rating. If you are looking for a second chance car loan, then this site: can help you.

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