RSS

Bad Credit Car Finance

12 Oct

If you have bad credit, you may think you won’t be able to qualify for bad credit car finance options, but it’s easier than you think. With just a little research, you can find the financing you need. These types of loans are fairly common because nearly a fourth of the population has credit issues. Even with bad credit, you should still be able to get the car you want, especially with a little advance preparation.

Improve your credit history rating

Before you begin car shopping, try to increase your credit rating if you have time. Get reports from all of the reporting agencies, and contact them immediately if you find any errors. Pay off any outstanding debts if possible. If you are able to start six months in advance, make a concentrated effort to make all of your payments on time.

Decide how much you can afford to pay

Before you being shopping, you should know how much you can comfortably afford to spend. This includes your down payment, any trade-in value, and your ongoing monthly payments. There are car loan calculators available online to help you determine how much you can spend. You don’t want to fall in love with a particular car, only to find out you can’t afford the payments. This would either end in disappointment because you couldn’t buy the car, or you might even be tempted into a situation that you can’t afford, which can further decrease your credit score if you are late on payments.

Documents to gather

Depending on the finance company, you may be asked for various documents before you can get a bad credit car refinance loan, such as proof of employment or income. Usually pay stubs or your most recent W-2s will meet this requirement, so gather these in advance. This will save time if you’re asked for it, which you most likely will if you are applying for a car loan with bad credit.

Specialist companies

Car refinancing for bad credit is available at many car insurance companies. Many companies specialize in borrowers with poor credit. Car dealers have access to a number of these car finance with bad credit companies, and they can help find you the best rates for your credit situation. If you are shopping for a loan by yourself, you can shop online to find your best rates.

Post-repossession car loans

Even if you have had a car repossessed, you can still apply for bad credit car loan financing; however, it may cost you a lot more, as most major companies won’t offer you a loan. You can shop through a sub-prime lender, but they will charge a much higher interest rate, and possibly extra fees. The longer you can wait before applying for a loan following a repossession, the more your credit can improve. If you can wait at least six months, you should see an improvement, although waiting 1 to 2 years is better, if at all possible. In the meantime, pay off any remaining balance you might owe on the repossessed car. This includes any difference between the loan balance and the car’s resale price, plus repossession fees such storage. The sooner you can pay this debt, the sooner your credit rating will start to improve.

Same day car loans

Bad credit auto finance is available at many car insurance companies. If you want to finance a car with bad credit, egardless of the reason, the easiest way to get a car loan is from a dealership that offers same-day loans. They typically do not run credit checks, using your proof of employment instead. If you can provide proof of income and that you have a bank account, you can get a car loan. However, be aware that the interest rates are extremely high, so they should not be your first option. If you are forced to use this type of loan, make sure you make the payments on time, and as your credit score improves, try to get an auto loan refinance with bad credit at a lower rate.