Getting a Car Loan with Bad Credit

May 4th, 2022 by

If you’re interested in buying a car, you may be in the process of finding an auto loan that works for you. Many lenders want to assess your credit history to determine if you’re a reliable borrower. However, some people have a low credit score, which can complicate the process. Here are some things to consider when preparing to take out an auto loan with bad credit.

Why Does Credit Matter For a Car Loan?

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When you begin the process of shopping for a vehicle, you may wonder why your credit score matters. Since many vehicles are costly, it’s beneficial for people to take out an auto loan so they can pay for the car upfront. Then, you can pay back the loan rather than paying off the car. In order to take out a loan, the lender needs to assess your credit history to determine how reliable of a borrower you are.

Your credit score can determine what type of loan a lender offers. With a low score, lenders may offer loans with higher interest rates. However, your credit score is not the only factor lenders consider.

How To Get a Car Loan

Getting an auto loan before buying a car is a common first step for people interested in purchasing a vehicle. Obtaining approval for a loan before you make an offer on a vehicle can help you stick with your budget while having the funds to pay for the car right away. There are a few steps you can follow in order to get a car loan.

Run a Credit Check

The first step for potential buyers is to check their credit. If you have a low credit score, you can keep reading to learn a bit more about how to approach the rest of the auto loan process. Looking over your credit score is the best first step since it tells you what approach to take as you prepare to purchase a vehicle. You can check your score once a year online for free.

Decide How Much To Borrow

The next step in the process is to determine how much you want to borrow. Taking out a loan is a big commitment, so it’s important to think through the amount that you can afford. Consider the monthly payment, how much cash you can pay right away, and the length of time you want to spend paying back the loan.

Get Pre-Approval

Many lenders allow you to apply for pre-approval for auto loans. You can have multiple lenders pre-approve you so that you can compare the different offers. This can help you make a decision about a loan that works best for you. Pre-approval can also expedite the process of buying a car.

Choose a Vehicle

Once you’ve chosen the pre-approval offer that you want to use, you can begin shopping for a vehicle. We recommend looking at a variety of Chevrolet vehicles before choosing the one that you want to purchase. You can contact us to learn more about what vehicles we currently have on offer.

Begin Paying Back Your Loan

After signing the paperwork for your new Chevrolet, you can begin to pay back the auto loan. Typically, you can arrange the payment amounts and the length of repayment with the lender. Consider setting up automated payments so you don’t miss any.

Tips To Get a Car Loan With Bad Credit

While the process may sound simple, it’s important to understand a few different methods for securing an auto loan if you have a low credit score. Your score may be low for a variety of reasons, but this doesn’t mean you’re ineligible for a car loan. Consider implementing these tips for getting a car loan with bad credit:

Don’t Be Discouraged

The first suggestion we have is to not let yourself become too discouraged after checking your credit score. Different lenders may have alternative perceptions of credit scores, and there may be an accommodating lender. It’s best to contact multiple lenders to see what options are available to you.

Improve Your Score

Another way you can approach the problem of having a low credit score is by trying to improve it before you take out an auto loan. Depending on the reasons you have a low score, there are a variety of things you can do to increase it. One way to improve your score is by paying down some credit card debt before applying for a loan.

Compare Lenders

As you begin reaching out to different lenders, try to compare multiple offers to find the one with the best rate. One way to find a lender that understands your situation is by applying for a loan from your bank. Since you already have a working relationship with your bank, it may be more willing to approve you for a car loan.

Consider a Co-signer

Lenders sometimes require people with lower credit scores to add a co-signer to their application. If this is the case for you, you can find a co-signer with good credit who is willing to become liable for your loan should you fail to make payments. A spouse or family member would be a good option for a co-signer. If you’re a young adult, you could ask your parents to co-sign the loan for you. This can increase the level of trust the lender has in you, which could improve your interest rates and get you a better deal.

Shop For Several Vehicles

A lender determines the terms of your loan, which can impact the type of car you’re able to buy. This is important to consider, since you may need to shop for many different types of vehicles before finding one that meets the lender’s requirements. Keeping an open mind can help the research and shopping process go more smoothly.

Be Aware of Add-ons

Another thing to consider is being aware of add-ons offered by the lender. A lender may try to add things to your contract, which could increase the total amount of the loan or raise your interest rates. It’s important to have a loan that doesn’t have any add-ons so you can ensure that you can meet your payments.

Bad Credit Car Loans at Eskridge Chevrolet in OKC

It’s possible to find a good deal on a car loan even if you have low credit. Consider following these tips to find a deal that suits you. Contact us at Eskridge Chevrolet once you’re ready to begin looking for your new vehicle. We’re here to help however we can. We look forward to seeing you soon!

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