There are currently many Americans who are in the market with poor credit scores to get an auto loan. They find themselves stuck in the same place and it is due to their bad credit rating that they can’t move forward the process of purchasing a car. With toxic credit score, qualifying for an automobile or a truck loan can be indeed tough but not impossible. You might settle down with a deal but the loan rates may never be favorable according to your financial condition. The least expectation that you can keep is favorable loan terms from industry financiers.
As the US economy is getting better, the car loan portfolios of the lenders are also growing. As per recent statistics from TransUnion, the average car loan debt per borrower is predicted to balloon by the end of 2017. So, what steps should the borrowers take who are already burdened with poor credit rating? Check them out.
- Open either a checking or a savings account
If you open either a checking account or a savings account and try your best to keep it in good standing, this can nurture your relationship with the bank. As soon as you successfully maintain an account for 3-6 months, you can then ask whether or not you’re eligible for a car loan at your bank where the managers and staff know you. This relationship can play the role of a catalyst in helping you get a car loan.
- Consider buying a certified used car
You may even consider buying either a used car or a certified used car as financing capabilities are more lenient for used trucks, cars and SUVs. The risk of losing money on the part of lenders is reduced and they don’t even require accounting for off-the-lot depreciation of the value of the car, thereby simplifying the process of obtaining a car loan with favorable terms.
- Save enough to pay down a sizeable amount on your car loan
If you have saved enough money to pay down at least 25% of the car loan amount in the form of upfront money, this can drastically improve all odds of sneaking a good auto loan deal with your lender despite having bad credit score. You can even choose to sell off your truck or car and use the proceeds to pay down for the car loan.
- Shop around and compare auto financing rates among several lenders
A bad credit score will definitely call for a higher rate on auto loan and this is something inevitable. But what’s the harm in checking with lenders and getting pre-approved for such a loan? There might be other lenders who are interested in providing you with deals with better rates, especially when you can pay down a large amount.
So, if you’re not too rich with your credit score and yet you wish to take out an auto loan, make sure you take the above mentioned steps to build your credibility among the car loan lenders.