There are so many car dealerships that do advertise financing for interested buyers who have no credit or bad credit. It is feasible for those with less than perfect credit to have car loan but still, it will need due diligence to ensure that the terms of the loan would stay affordable. The tips discussed below can help interested individuals to get a car loan with low credit score.
Number 1. Know about your score – the very first step for any potential car buyers who have poor credit is finding out exactly how long their scores are. Consumers have lots of ways on how they can access their credit scores. In general, score that’s above 650 is considered good credit risk while a figure below this is subprime. Meaning to say, even if you receive a loan, the interest rate may be high.
Number 2. Save on down payment – in most instances, buyers are able to get low rate of interests even if they have bad credit by simply putting down payment on a car. As a matter of fact, 10 percent down payment is typically sufficient to have access to favorable terms. What this actually mean is, if the car you want to put in financing costs 10k dollars, then you will need to give a 1000 dollars as down payment especially if you have credit score of 650 or below.
Number 3. Consider looking for a cosigner – if you have a close friend or trusted relative who has good credit score and willing to cosign for car loan, this can give you more affordable package for financing. However, you must know as well that this individual who will cosign for you ought to undergo a credit check and agree to serve as guarantor if you fail to repay the loan.
Number 4. Look around – for subprime buyers, they are normally paying 9 to 10 percent interests on the car loan than the 3 to 4 percent for people who have good credit rating. Buyers must know as well these figures when applying for financing. Before you get financing, make sure that you have checked every offer you receive because there’ll be time when you will get 10% interests or higher which is not totally worth of your time.
Number 5. Do the math – in addition to getting educated on expected interests before you shop, buyers need to be aware of what they can afford and stick to it. Meaning, calculate the targeted purchase price as per total amount that you expect to pay and not focus too much on monthly payment you can afford, this is going to be crucial if you don’t want to face any problems in the long run.