Life doesn't always work out how we would like, and things can happen that can lower your credit score. If you have a low credit score, but you need to purchase a vehicle with a car loan, there are a few things you can do.
Get Your Credit Report
Don't wait for the bank to surprise you with your credit score. You can obtain your credit report information from all major credit agencies once a year without having to pay any fees. Many banks now provide free credit score updates for account holders, and there are lots of sites, such as Credit Karma, where you can monitor your credit report year-round. Knowing what is on your credit report will help you apply to lenders that provide loans to individuals within your credit range.
Improve Your Score
If you can wait a few months to get a new vehicle, then you are going to want to take some time to improve your credit score. There are easy ways you can improve your credit score, such as pay off any accountants that are in collections, make all of your payments on time for the next few months, or even consolidate your debt so you only have to make one or two payments instead of ten. Try to improve your credit score for a few months.
Save Up Some Cash
Next, you need to save up some cash. If you let a lender know that you have money saved up for a down deposit, even with a poor credit score, you are more likely to get a loan. Try to save up around 20% of the cost of the vehicle you want to purchase.
Apply for a Loan in Person
This is where it can be helpful to apply for the credit in-person instead of just submitting a loan application online. Applying in-person can give you a chance to explain your credit score, show how you have been working to improve your credit score, and let the bank know that you have been saving up cash. Applying in-person will ensure that an actual individual, and not a computer program, considers if you are a good candidate for an auto loan.
Apply for a Personal Loan
If you are struggling to get approved for an auto loan, you may want to consider applying for a personal loan instead. Personal loans often carry higher interest rates and shorter repayment terms, but they also generally accept lower credit scores and are a good option if you really need a loan and can't get a regular auto loan.
If you need a new vehicle, but your credit isn't in great shape, try to improve your credit score for a few months, save up for a down payment, and apply for a personal loan. Additionally, some lenders will make bad credit auto loans if you ask.
When I started shopping around for a car, I knew that I wanted something a little different. Unfortunately, I had no idea what to look for, which made things complicated. I visited several different dealerships, but it wasn't until I worked with the right salesperson that I found what I wanted. My salesperson showed me exciting new car models and talked with me about safety features, which really helped me to narrow down my choices. Check out this blog to learn more about finding the perfect car so that you don't have to worry about having buyer's remorse down the road.