Bad credit new car financing is still available to you even if you have less than perfect credit. In fact, many lenders are more than willing to offer loans to individuals that have poor credit scores. Read the information below as to what you should do before applying for the loan and the available options that lenders are offering for poor credit scores.
Before you Apply for the Loan
First, before you start to apply for loans, you should have a good idea of where you stand financially and you should be able to use this information to determine what kind of loan you can obtain. The first step in this process to acquire your credit report. You can get your credit report free each year, as dictated by law, through the three major credit reporting companies, which are Experian, TransUnion, and Equifax. Get the free copy of your credit report and carefully analyze it. Be sure that you agree with all of the items there and that no mistakes on the report are present.
Second, make it a point to raise your credit before and during the application process if your score is less than perfect. You can easily begin to raise your credit score by a few points every month just by paying your bills on time and decreasing the amount of your credit card bills. Additionally, check your credit limits and make sure they are accurately recorded on your credit reports. Also, avoid closing out old cards as lenders like to see a long history. For example, charge a single bill, such as a cable bill, on each card, then pay it off each month. In this way, you'll be adding to your credit history and improving your score at the same time.
Varying Options Offered by Lenders
There are several options that lenders offer in order to accommodate those with poor credit. One option that lenders will offer a signature loans, otherwise called an unsecured loan, as an auto loan. This kind of loan will be based solely on your credit rating, so you should expect to pay a higher interest rate if your rating is poor. Another option that lenders may offer is to provide a second mortgage against your home or second lien against the vehicle you want to purchase. Some lenders will even help to arrange for a consolidation loan of all your existing debt. If the lender is able to find a third party who will offer you a lower interest rate and lower monthly payments on the consolidated debt, then the lender may be able to qualify you for an auto loan. Overall, lenders provide a variety of options in order to accommodate you and your less than perfect credit score. Be sure to carefully consider the advantages and disadvantages of each option before you commit to it.