Fair Credit or Bad Credit Auto Loans
Reliable transportation is increasingly becoming more of a necessity. However, the average car prices have been steadily rising as indicated by www.roadandtrack.com/car-culture/buying-maintenance/a27016809/new-car-msrp-increase-2019/. Before you visit a car lot, consider what fair credit or bad credit auto loans can do for you in terms of buying power. Try to give answers to the following:
- What kind of vehicle do I want?
- What kind of vehicle can I afford now?
- How long do I want the vehicle to last?
- Do I want to buy used (to save on sticker price) or new (to avoid potential repairs)?
- How much of a down payment can I afford now?
- How much of a monthly payment can I afford?
- How healthy is my credit score?
There are several things to consider and plan for in order to avoid making a mistake when buying a car.
How Does Credit Score work
A FICO score is a measurement of your risk as a borrower. It is used by financial institutions and lenders to help determine if they are willing to provide a line of credit and how they will charge you. The score is affected by the financial decisions you make such as the amount of debt you take on, frequency of opening a line of credit and paying down debt. It does not include small, everyday transactions. Your credit report is the overall summary of your financial history. Most times, your score doesn’t show on the report.
Check Your Credit Score
You can get obtain a free credit score from different sources, such as www.experian.com or ask Car Loans of America when you apply. It may not be the same as the scoring model dealers make use of, but since the credit scoring framework places much emphasize on the same factors, it will give you a very good idea of where you belong. All your previous debts appear on the report, in addition to the lines of credit and any past missed payments. Dedicate time to checking out thoroughly your credit card information and loan balances to what’s obtainable on the report.
Mistake on Credit Report
Verify the authenticity of the information on your credit report to determine whether it’s factual or not. If you discover a false statement on your report, you should dispute it. Don’t exhaust your time calling the credit bureau instead mail them a letter to establish a paper trail and include extra copies of all documents that verify your claim. Stick to facts and leave out unnecessary commentary. If they don’t respond to your request after 30 days, then they must remove the challenged items. Furthermore, if the disputed claims end up being untrue, they have to update your credit report.
What credit score do you need to qualify?
It’s possible you have been late to pay up your credit card payments lately or missed a cell phone payment, but it doesn’t mean you have bad credit. Know in advance what your credit score is before you start making decisions you will regret in the future.
We have different ways to check your score online for free, though accuracy may differ from the real FICO score. But it can give you a realistic view of what range you are presently at. Most people think they have bad credit while in all fairness, they don’t.
Payments must be late by a minimum of 30 days before they are reported for action, and now all things being paid for should be made available to the bureau. Furthermore, credit scores are not necessarily about payment history. It can be divided into five different categories:
- 15% = length of credit history
- 30% = amounts owed
- 10% = new credit
- 35% = payment history
- 10% = credit mix
Even if 35 % of your score comes from your payment history, it doesn’t mean your score is dependent on it. It will take you by surprise when you see that your credit score is not as bad as first feared.
Just check out any place that can approve a loan for you for at least a 650 or above. You will pay a much higher interest rate if you possess excellent credit, but it doesn’t apply to everyone especially those with stable jobs that choose an affordable car.
If it comes to consigning fair credit or bad credit auto loans, find a co-signer with a credit score much better than yours to help alleviate the lender’s total risk of lending. This can decrease the APR that the lender gives because they can take an average credit score of both applicants.
What Car Can I Afford?
Don’t be bothered much about the look of a car, such as the color, instead focus on performance so it does what you need it to do. Durability is what you should look for, especially if you are taking care of your family, then get a model that is as new as you can afford. It is advisable for you to make a monthly budget and save up cash in advance and don’t solely rely on a lender.
Saving up cash for a down payment increase the chances of getting better fair credit or bad credit auto loans. Having a higher investment in your car also helps against you going bankrupt in case of a car accident early in the loan term. Always have it at the back of your mind that the value of a car starts reducing the moment you drive it out of the dealership.
If you want to consider selling the vehicle off later, you won’t be in debt more than it actual valuation because you already paid off a very significant chunk. Generally, if you have savings in the bank, many lenders will be interested in giving you an auto loan. They will also offer a much-improved auto loan rate, so it is advisable to save a large chunk and make a down payment. This is a bait to tempt the lenders, and in a situation where you lose your job, or you are incapacitated to work, you will have something to fall back on.
Make sure to thoroughly go over the contract until you understand it enough to explain it to someone else. Keep a copy of the loan contract in a safe place such as a fireproof safe. This is extremely important as signing the auto loan contract and following the stipulations given. Your contract will explain everything from your monthly payments to how to avoid defaulting on your loan. It should have all the details discussed and signatures signed and dated appropriately. Never trust that it will be sent by mail as mail can take a while to arrive or get lost in the process. Use the contract for reference purposes.
Apply in Person or Online?
Looking for fair credit or bad credit auto loans in the online space is a viable option if your credit score is low. Most times, online credit lenders give better rates than banking institutions through car dealership merely because they don’t have branches visible physically anywhere to oversee its affairs.
Most online lenders target consumers with low credit scores because they are more likely to be rejected by traditional lenders. Of course, the auto loan interest rate will be higher than someone who has great credit, but maybe not as high as the ones you will get with a car dealership.
It is advisable to get loans with at least one month window after paying another loan off to steer away from frequencies that will negatively affect your credit score. Most online lenders give rise to instant approval for you to know quickly the kind of offer you are qualified for.
Car Loans of America
Car Loans of America has fair credit or bad credit auto loans services that make you a car, motorcycle, or truck owner fast. Our quick and simple online auto loan application can get you your dream car within a few days. Feel free to call us at 866-601-2749. Want to be updated on a lot of low-cost online auto, mortgage or personal loans? Please follow our updates on this site.