Millions of people are dealing with poor credit today, and with the economy worse than ever this number is on the rise. While it is possible to cut corners in some ways, it is simply not realistic for most people to try to live without a car. Many people who are in this situation might not be aware that there are actually ways to obtain auto financing for bad credit. Before you begin to approach the car dealerships to ask for auto financing with bad credit, it is best to acquaint yourself with some facts and figures about this type of bad credit auto finance so that you can get the best deal that you can.
First, you need to be aware of exactly what your credit score is. There is a common misconception that running your own credit report too often will cause your score to plummet. Actually, this is not true: However, if you apply for credit too often it will indeed cause your score to take a hit. You simply need to order a copy of both your credit report and score. If you use an online source you’ll be able to view it immediately. When you approach a dealership or lender for poor credit financing, or even for bad credit auto refinancing, you will be able to negotiate more effectively if you know the position you are in.
The fact is, the only people who usually get those very low, or even 0%, finance rates are those with credit scores over 720. If your score is in the 600 to 700 range, you can still get a good rate, but you will be unlikely to secure the rock bottom finance rates. When you dip below 600, and even down into the 500s, you will need to consider which dealers are willing to do auto loans with bad credit before you approach them. Credit scores this low will often mean that finance rates can be 18% or higher.
Generally, the sub-prime lenders who will do auto loan refinance with bad credit are those who are associated with smaller car dealers. However, it is always worth a try to approach a larger car dealership and ask them if they might have a lender who could help you. With the increasing number of people with poor credit scores today, more car dealers are doing business with sub-prime lenders than ever before. Even though you are aware that your finance rate will be considerably higher than you would pay with good credit, it is still wise to do some price comparisons by talking to at least a couple of car dealers and lenders.
In order for you to be financed when you have very poor credit, there are several requirements that tend to be fairly standard. Usually, you will need to prove your income of at least $1500 per month. If you have been at your job for about 6 months minimum, it will work in your favor. With auto financing for people with bad credit, you should expect to be asked for a down payment. Typically, the amount of the down payment will be at least 10% of the car’s total cost. With this type of loan, you will often need to agree to pay off the loan in a fairly short period of time as compared to a good credit loan. For example, a bad credit car loan will often have a three year or less payment period, while the good credit loans are often as long as seven years or more.
Having bad credit may be an impediment to getting the very best rates on a car, but it does not have to keep you from having a car at all. Once you have secured your bad credit auto financing, make sure that you pay faithfully each month. Over time you will find that your credit rating will rise, and that you will be able to secure easier financing in the future.
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- Auto Loan Refinance With Bad Credit
