Many people are trying to find an answer to the question: can you get car finance with bad credit? Although your options may be limited in this case, it is not at all impossible to obtain a car loan. There are loads of lenders who will still offer car finance for those who have bad credit history.
Here are some tips in finding the right solution for your situation:
Understand your Credit Report
Find out and understand what is in your credit report, so you will not be surprised by it when you apply for car finance. You may research online for websites that check credit report for free.
Looking for a car loan will not affect your credit profile. However, applying for loans that are not suitable for your credit profile may affect it. Before applying for a loan, look into the lenders first because whenever you apply to a lender, there will be a record of that on your credit profile for a period of 12 months. Some companies will even lower your credit score by a specific amount for every search made in your name within that time frame.
Check out the requirements of your potential lenders before applying for car finance, so you may have an idea if you are suitable for it. This strategy can help you choose the right company.
What to Do When you have Been Declined
Lenders have certain requirements that you need to meet, but these vary from one lender to another. Therefore, if you have been refused by a lender, it does not mean you will be refused by another. When deciding on your application, lenders consider your payment history, personal situation and other factors.
Car Financing with Bad Credit
Those who have good credit profiles have bigger chances of getting a car finance with low interest rate. If you have a bad credit score, the amount you want to borrow can be lower than what you expected. The lender wants to ensure that you can afford to pay the money you borrow based on your current financial situation.
Increasing Chances of Obtaining Car Finance
To help your chances of getting approved, you may offer to pay a deposit. A decent down payment lowers the risk of the lender. On average, the down payment on a vehicle is about 10%. If you can pay more, it will increase your chances of obtaining car finance.
Another tip is to pay your bills on time and other types of credit you owe like loans and credit cards. This will prove that you are a trustworthy borrower and that you could manage your expenses well.
If you cannot pay higher down payment, it does not mean you cannot get car finance. By doing a little more research, you can find the right lender for your situation. So, can you get car finance with bad credit? The answer is yes. Just make sure you have properly done your computations and that you can afford to make the monthly payments.