You want to buy a car on credit but you have a bad credit score? Bad credit car can put your dream of buying a new car into danger. But worry not you can still get credit for your car but you will have to be careful as you might have to pay a higher rate of interest but don’t let that discourage you.
Here are simple steps that will guide you to get a Car Loan.
Credit score: Credit score plays a vital role in getting a car loan as lenders will decide your rate of interest upon seeing your credit score. Before you apply for a car loan, you need to know your credit score. There are some portals available where you can check your credit score at free of cost.
Improve your score: Keep patience and wait for some time before buying a car so instead of buying a car with bad credit try to improve your credit score. Solve your disputes and make your payments in time for at least 3 months to boost up your credit score.
Approach private dealers: Dealers can offer you car loans with your bad credit score. But, be cautious about these pre-approved loans because most of the dealers can charge you with a high rate of interest. They have tie-ups with some banks and financial organizations, and they can sell the loans to earn commissions. Even they can give you discounts on their car accessories and you can save your initial cost by availing such loan. But, in the future, you need to pay high interest for such a loan. Thus, you must check their terms and conditions before you sign the loan agreement.
Pre-approved loans: If you have a bad credit car then getting a pre-approved loan is one of the safest options. In this process, your credit score, income, expenses, debts are analyzed and a report is made that decides if you can qualify for the car loan or not and how much any lender would be willing to give you like a loan and what interest will he take. You will get a letter that you can take to lenders this prepares you mentally and you are saved from any disappointments or headaches you face while looking for the loan.
Guarantor: You can take your friend or family members as co-signer. They can work as a guarantor of your car loan and lenders can approve your car loan after checking the credit history of your co-applicant. It is a better decision because you do not need to pay high interest for such a loan. But if you fail to repay their loan amount then the lender will recover their loan from your co-applicant.
Choose wisely: under such tough circumstances, you should choose your bad credit car wisely. Buying an expensive modal will not be advisable at this stage, in fact, you can go for second-hand cars as they are equally good, they solve the actual purpose like the new ones and yet you get them at a much lower price. The rate of interest in second-hand cars is also very low.
Instead of buying a bad credit car, you should try to keep your credit score good. Paying your credit card bills, mobile bills, electricity bills on time will keep you in a good book of lenders and you can easily get any kind of loans if you have a good history of paying bills on time. This basic practice will also save you from increasing your debts due to fines, late payment fees and higher rates of interest.