Media post: How to Get Car Financing with Bad Credit

Photo by Mink Mingle from Unsplash

Bad credit might seem like a curse, especially if you are applying for car financing. Some lenders might view you as a high-risk individual with the potential to default on payments. Nonetheless, while your credit rating can be important, do not let it get in the way. It does not mean that you cannot get a new car!

Read on and find out some of the best ways to increase your chances of qualifying for financing despite your credit history!

Tips to Get Approved for Car Financing Even with Bad Credit

Is it time to finally make your dream car a reality? If money is an issue, you can turn to financing. For some people, however, it is easier said than done, especially if you have bad credit. Nonetheless, poor credit rating is not a hindrance, especially if you know how and where to look. Below are some tips to keep in mind.

1.   Correct Your Credit Score

Credit bureaus might make mistakes, which can compromise your credit score. If you have doubts regarding the accuracy of the score, do not hesitate to get in touch with the credit reporting company. Take proactive measures to dispute errors. Explain the situation and attach proof that you believe will help you make a stronger case. Depending on the credit reporting bureau, they will have dispute forms that you need to fill up to provide more details.

2.   Improve Your Credit Score

While the results do not appear overnight, improving your credit score can put you in a better position to be approved for car financing. Not to mention, it might also qualify you for a larger amount or a lower interest rate. One of the best ways to improve your credit score is to consolidate your debts and pay your bills on time. Improving your credit utilization rate can also help. If you have a credit card, you can also ask for a higher credit limit.

3.   Make a Bigger Down Payment

The higher the down payment, the lower the amount that the lender has to finance. In turn, this could also mean lower risk. So, if you have bad credit, think of ways by which you can pool enough money for a higher down payment. If you do not have enough savings, consider asking your family. They might be kind enough to extend a hand to help you have the car you want! If you have a car, you can also sell it so that you can raise money for a larger down payment.

4.   Choose a More Affordable

The more expensive the car, the more difficult it can be to qualify for car financing, especially if you have bad credit. Hence, one thing you can do is pick a more affordable car. If possible, opt for an older model or go for one with basic features. If the car is more affordable, the company extending the financing will have a lower risk.

5.   Prove Your Stability

The burden of proof is on your end, so find ways to prove that you are stable, especially from a financial perspective. This can convince companies that you have the means to pay what you will owe. This can be in the form of employment. Prove that you have a stable job with decent pay that will make you afford the monthly payments. Prepare proof of income and additional sources of funds. You can also show proof of address, especially if you are living in a house you own with a mortgage that you have already settled.

6.   Get a Co-Signer

While we are not giving any guarantee, getting a co-signer can improve your chances of being approved for car financing. The co-signer will assume responsibility once you are unable to repay the loan. However, it could damage your relationship with the co-signer, so proceed with caution. Also, pick a co-signer with a strong financial background and good credit standing to increase the chances of approval.

7.   Compare Your Choices

You will find many loan companies online, and even offline, but it does not mean they all offer the same service. Watch out for the interest rates, as well as the terms and conditions. It is best to look for at least three companies and compare their offers. Read online reviews and learn from the real-life experiences of other people, which should make it easier to narrow down the possibilities. Consider various options, including traditional banks, credit unions, and dealer-arranged financing.

In Closing

Photo by Gustavo from Unsplash

Bad credit and getting a new car are two things that might not always go together. Depending on where you live, your credit score can impact the chances of having a car financed. Nonetheless, bad credit is not the end of the world. You can still have the car you want if you take proactive measures, including those earlier mentioned.