If you have declared bankruptcy, been foreclosed on, recently gotten divorced, have missed loan payments in the past, or have been repossessed on, you may think that there is no chance for you to get a car loan. You’d be wrong! Despite major setbacks to your credit score, you can still secure financing for a car. You just have to go to the right place, and work with the right professionals to get the job done. This blog is going to be a guidepost for people who have bad credit and need to get a car. We promise you that no matter what your credit score is, you can still get a great auto loan. Let’s explore bad credit auto loans in more depth!
Your Best Bad Credit Options for Auto Financing
When you have bad credit your financing options are limited, but they are not non-existent. Below are four good options for people with bad credit scores, read more about each option to see which one might be the best fit for your unique situation.
- Credit Unions – The first place you should start when seeking an auto loan with bad credit is a credit union. You may already be a member of a credit union, but if you are not look into membership with credit unions in your area. These financial institutions generally provide consumers with very good loan terms, and they more often than not work with individuals who have poor credit. If you can get approved for a loan before you start the car buying process you can shop with a lot more confidence because you’ll know exactly what you can and cannot afford to spend.
- Buy Here Pay Here Dealerships – Buy here pay here financing is another wonderful way for people with poor or bad credit to get a great car loan at a price they can afford. This method of financing removes the financing institution from the car buying equation. Dealerships who offer this type of financing, finance the purchase of the cars themselves and act as lender and seller. The advantage of this type of financing is that you can work directly with the dealership where you are buying the car to establish a financing package that fits your unique financial situation. It is in both of your best interests that you are able to pay back the loan the dealership provides you. Therefore, you’ll get loan terms that are more geared to your specific financial situation.
- Get a Cosigner – No matter what your credit score is if you can find someone to cosign your loan application with you, you will get better loan terms. This can be a lot to ask of somebody though, since they will be responsible for your debt in the case that you fail to make your payments on time. If you have a close friend or relative who is willing to do this for you, you will greatly improve your loan’s interest rate and terms since there is less risk for the lender. However, the person cosigning with you should have better credit than you. Ideally, the person co-signing the loan agreement with you has a good credit score.
- Second Chance Car Loans – One final option for people with bad credit scores is second chance car loans. There are plenty of companies who specialize in second chance car loans. You can search for second chance car loans near you and see what each lender offers. If you have no other options, this is a great opportunity to get a car. No matter how bad your credit is these companies specialize in offering people second chances. Having a reliable car can be the difference between turning your life and credit score around or spiraling further into debt. A second chance car loan could be exactly what you are looking for!
Other Things You Should Know About Bad Credit Car Loans
- It Can Help Improve Your Credit Score – It’s true! Getting a loan on a car and making regular payments on time will actually help improve your credit score. So if you have bad credit, getting a car loan and making your payments can actually help you turn your credit situation around.
- If You’re Applying for Multiple Car Loans do it all at Once – Applying for a line of credit temporarily hurts your credit score. If you have bad credit and you’re applying for more than one auto loan, make sure you put all of your applications in during the same two week period. If you don’t, you could hurt your credit score even more and end up with worse loan terms than you would have had before due to your lowered credit score.
- Know Your Score Before You Start Applying for Loans – Before you start the process of finding an auto loan, make sure you know what your credit score is. You can go online and use free tools like Credit Karma to find out exactly where your credit score is. The great thing about tools like Credit Karma is that it will also tell you ways in which you can work to improve your credit score. If you can, work to improve your credit score before you apply for a loan. This will ensure that you get the most competitive loan terms possible, and you will pay less overall in interest.
When you’re ready to get a great used car no matter what your credit score is, come to Fairless Motors! We are proud to work with all credit types. At Fairless Motors we even offer buy here pay here financing too. We understand how hard life can be when you don’t have a car. Our friendly, professional financing team will work with you to find the right finance plan for your situation. Come visit us and check out our extensive inventory of late model, low mileage used cars today!