If you have bad credit and you need a new car, you may be intimidated by the process of securing an auto loan. You may have been told that it’s virtually impossible to get a good rate if your credit is less than stellar, or you may think your loan options are going to be very limited. While it’s true people with poor credit may have a more difficult time finding the right loan, there are plenty of ways you can get into your dream car without paying a prohibitively high interest rate. Here are some tips to help those with bad credit when they want a new car.
Review Your Credit History
Before you take any steps to buy your next vehicle, make sure you know your credit history and status. Sometimes, your credit may not be as bad as you think it is, so it’s important to order a credit report and check your score. There are three different credit agencies that offer consumer credit reports. Make sure you get information from all of these bureaus because sometimes, information may be different across the different reports.
Fix Any Mistakes
Next, it’s time to look carefully at your credit history reports and verify details. Ensure everything on your reports is accurate. Many people may have mistakes sitting on their credit reports, such as outdated information or inaccurate details. This information helps lenders determine what kind of loan you will get, so you need to take steps to correct any mistakes you see on your report. Each credit bureau has its own internal policies about how to go about fixing errors.
Pay Any Past Due Bills
Another way you can help make your credit work better for you before getting an auto loan is to immediately pay any bills that are currently past due. Even if you have struggled in the past to pay your bills on time, it’s important to show lenders that your current bills are all paid on time. Banks and loan operators may be hesitant to offer financing to customers who aren’t current on their bills. This may show a lack of income or a lack of responsibility, which can limit your financing options for your future vehicle.
Negotiate With Creditors
If you are really struggling to pay a current credit card bill, you can try to advocate for yourself to help you meet your financial obligations. Anytime you are concerned about not being able to make a payment for the month, give your credit card company a call and explain your situation. In many cases, you can negotiate a different payment plan or ask for an extension on your bill to help you manage your finances better. This is something that shouldn’t be done on a regular basis if you want to look better to the loan companies.
Talk to Lenders
It’s also a good idea to talk to your potential loan companies and give them a face to go along with your name. People with less than perfect credit may have more success if they choose a lender that has a real, human representative who makes decisions about loans instead of an automated system. This way, you can get a car with subprime auto financing.
Be Realistic About Finances
Before you go loan shopping, make sure you are realistic about your financial situation. Add up your monthly finances and expenses to determine if you can actually afford to get a new vehicle. You can save time and effort by doing these calculations yourself before you step foot into the financing office at the car dealership. It’s also important to choose a car you can afford.
Build a Positive Credit History
Once you get your loan approved, it’s time to begin rebuilding your credit. Pay your monthly auto payment on time to help build that positive credit history. Work on paying off other loans or credit card debt to get a fresh start and improve your financial health. Over time, you’ll be able to enjoy a stronger credit score and make your credit history even better.
Having credit problems doesn’t mean you need to put your dreams of owning a car on hold. Explore some of these options to help you get into the driver’s seat and make better choices about your money.