Getting a Bad Credit Car Loan
With the recent economic slowdown and the credit crunch, it’s quite likely that you may not be able to afford a car loan. It’s also possible that you may even have a bad credit history. But it’s possible to get a bad credit car loan. Banks, financial institutions and many credit unions are willing to give bad credit car loan to those that need it the most.
Check your credit report for discrepancies and report it immediately:
It’s important that you shop around when you wish to get a bad credit car loan. It’s important that you get a copy of the credit report before you actually start looking for bad credit car loan. Check if all information is correct or not. If you find discrepancies in your credit report then report it immediately and get it rectified. Remember if you can improve your credit score, then you can get a favourable interest rate on the bad credit car loan.
Once you have the credit report in hand, its time to shop around for the financing of the bad credit car loan. It helps to know realistically the amount you can afford before actually looking at the car.
Approach your own bank or credit union:
If you have a checking or a current account with a bank, then approach the bank for the bad credit car loan. Bigger banks have specialized departments or at least a person who would be looking at the bad credit car loan. It’s important that you apply for the bad credit car loan in person. Illnesses, divorce and accidents can leave a bad mark on your credit report. Report to the officer the reason for the bad credit and in most cases they would be willing to work with you and extend the bad credit car loan that you need.
Depending on your credit report, you can get a bad credit car loan. The interest rates for these loans would range from 10-20%. Those that have a dented credit report won’t get a great rate for their bad credit car loan, but they will surely get a loan. If you approached a bank before you approached a dealer, chances are that you would get a better interest rate on your bad credit car loan. Dealers get commission or cut when they get the cars financed from a particular bank.
Things to look out when approaching a dealer:
When you approach the dealership, remember there are three things that you need to look at
- The car price
- The value of the trade in
- The financing
If you weren’t careful, the car dealer salesman would try to lump all the three elements together for the bad credit car loan. In this way you would be paying a steep amount for the bad credit car loan that you just took. Either you would be paying a big down payment or a higher interest rate for the bad credit car loan or even both. Don’t be scammed by the car dealer into paying through your nose.
Get the car that you have chosen checked through an independent car mechanic before you purchase a bad credit car loan. If the car dealer refuses to let your mechanic check the car, go to another car dealer.
