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Steps in Getting a Car Loan if you have Bad Credit

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Request for your credit report

It’s always better not to take chances and hope that your credit rating will magically just improve in the eyes of the lender. Your credit score will define the fine line between application approval and denial. Not only that, but getting approved isn’t your only concern. If your credit score means you have to sign up for the worst possible deal, it’s better to hold back rather than force yourself into a desperate situation.

By checking your credit report in advance, you will have a good overview of what to expect. Once you know what your credit score is, you can easily decide whether to proceed, to skip to plan B, or wait a little longer until your credit has improved.

Seek the help of a cosigner

If you know someone who has good credit and willing to help you out, it can significantly increase your chances of getting approved for a loan. Basically, your cosigner will be held liable if you default on payments, so this will limit the lender’s risk. This is why it is important that your cosigner has good credit standing. However, not only is it a bit difficult to find someone who will risk their credit with you, but you might also jeopardize a good relationship, so you have to be very careful with this option.

Find dealers specializing in bad credit

Believe it or not, there are actually dealerships which focus mainly on catering to clients with bad credit, even as bad as having recent foreclosure or being into a debt management plan. However, you can expect that these companies will charge very high interests than normal. Fortunately, they can help you tailor a payment term that is suitable for your current needs and budget. Now it’s up to you whether you’re okay with paying extra, or you’d rather just be patient and give your credit some time to improve.

Consider getting a less expensive ride

If you have bad credit, you have to accept that you won’t be in a powerful position to make bargains, especially when you’re looking at an expensive vehicle. For the meantime, you’d want to focus first on purpose rather than style. Consider getting  a cheaper car, for which not only is it easier to qualify, but one that won’t give you much financial headache. Choose one that you can ride safely for a few years, and try not to finance it longer than 36 months. This way you won’t have to deal that long with skyrocketing interest rates associated with bad credit. 

Keep fixing your credit

Although it is possible to apply for car loans with bad credit, it is not something that a sane person would like to undergo more than once. After learning your lesson the hard way, try your best to survive and get out of it soon, and make sure you exert the effort of improving your credit, so when the time comes you need a loan again, you won’t have to settle for anything less than an acceptable deal.

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