Car Loans of America is here to help people going through financial emergencies obtain bad credit car loans Tucson Arizona. Looking to buy a new or used car but can’t due to bad credit standing? You have nothing to worry about as we will give you the funds that you need. Yes, even with your bad credit! We are the best car financing company and our swift approval system will make sure that you receive the funds within minutes once you apply.
We provide same day funding and work with bad credit, specifically those seeking bad credit car loans Tucson Arizona.
If you are wondering why you are being asked to high interest rate on your auto loan, the reason may be your poor credit rating.
How you got stuck with a poor credit rating may have several reasons, such as making late payments to lenders or not having enough years of credit history or even identity theft.
Understanding credit score
A credit score is a three-digit number that is based on your credit history. Although there are several credit scoring calculators. The one that is mainly recognized in the market is the FICO credit score. FICO, originally known as Fair, Isaac, and Company. Is a data analytics company that provides data scoring services.
The credit score under FICO ranges from 300 to 850. If your score is under 540, you may very well be denied any kind of an auto loan. On the other hand, if your credit score is 740 or above, you can expect to get the best interest rate. The average American score is usually 682.
Your credit history
Your credit history dictates your credit score. This may include your credit cards, student loans, auto loans, and mortgages.
All this is calculated by FICO score. In addition, it may also calculate your payment history that includes a history of late payments, duration of opening your accounts, frequency of use of your accounts and any new credit lines opened.
Your credit score dictates your interest rate
Fortunately, or unfortunately, it is your credit rating that dictates the amount of interest you need to pay on your car loan. Of course, lower the score, higher would be the interest rate.
You may not believe it, but if you have a great credit, you may even get an auto loan at zero percent! For a really poor credit score, the interest may go up as high as 20 to 30 percent.
How to improve your credit score?
Before you set out to find lenders who provide auto loan on bad credit, try and improve your score. If you are proactive in doing this, you may improve your credit history by the time you apply for an auto loan.
There are several ways in which you can improve your credit score:
Employ credit management strategies:
Good credit management strategies, including paying all your bills on time will help you in improving your credit score. In case you are unable to pay and have a valid reason, talk to your service providers and they will offer some options.
Take the short-term loan route:
A good way to lift up a bad credit score is to take short-term loans on your investments and pay them on time.
Apply for a credit card:
Chances are it may not get approved, so make efforts to take it against your fixed deposits or against your minimum bank balance held in your main banking account. Make the credit card payments on time.
Sort out disputes:
In case there are disputes regarding pending payments affecting your credit history, clear them at the earliest. This may take time but will certainly get a good credit score in the end.
Take the lender into confidence:
Lenders possess vast experience in dealing with bad credit. If you talk to them, they will certainly point towards a viable action plan.
Who to approach for bad credit car loans Tucson Arizona?
If you are stuck with a poor credit rating and are not in a situation to improve your credit score, you may have a problem on your hands. Although it is difficult to obtain a regular auto loan with a bad credit score, it is not the end of the road.
You have a few options. All you need to do is to shop around for a lender and not settle for the first one that comes your way. Car Loans of America sources that you can tap are banks, Dealer Financial Services Group, car dealership, finance companies, and credit unions. We’re here to assist you with your bad credit car loans Tucson Arizona needs!
How to get bad credit car loans Tucson Arizona?
Your first step should be to approach a reputable bank or lender, as they will guide you regarding the options available for financing your auto loan. This approach will help you in avoiding a high-interest rate.
The following steps will help in securing bad credit car loans Tucson Arizona:
#1 Consider your urgency of buying a car
The need becomes urgent if you don’t have any other mode of transport. But, if you want it as a luxury item, you may be making a mistake. The bottom line is, buy a car with bad credit only if it is an emergency.
Explore other options, instead of buying a brand-new car. If your current car is in a bad shape, get it repaired. In case you don’t have one, use carpooling or public transport. In about six months or a year, you will be able to rebuild your credit and qualify for a normal auto loan.
Get a secured card by making a deposit in the bank and paying on time. This is one of the ways to rebuild your credit and improve your FICO score since your payment history will be reported by the card issuer to three major credit bureaus. Once you close the card account, you get your deposit back.
#2 Be sure of your credit report
Your lender can mislead you regarding your credit score in order to charge higher interest for bad credit car loans Tucson Arizona. So, don’t take their claim of bad credit at face value, but perform a free credit report check yourself once every year. This way you will not only see your credit score but will also get to know what all activities have affected your score.
It is best to show your credit report to your potential lenders when you discuss your financing. In case of poor credit, talking to your lender may soften them up regarding low interest on bad credit car loans Tucson Arizona depending upon the reason for such a score.
#3 Interpretation of bad credit differs
You may assume that your credit is bad, but this may not appear to be so to your lender. This means that different lenders interpret and give different weight to bad credit. So, on your part, do your research and find out the rates charged by various lenders, so as not to get charged with a higher interest rate.
The best way out is to look up the auto lending rate sheet of lenders. This gives the current rates of new and used vehicles based on credit score. See where you fit in the slot and carry this sheet with you when you meet the lender.
#4 Don’t cross two-week time frame
Once you apply for bad credit car loans Tucson Arizona, lenders will check your credit score. Each time they do so, it negatively impacts your credit score. However, if you apply for bad credit car loans Tucson Arizona from various lenders within a two-week time frame and they all do the inquiry simultaneously.
Such inquiries would amount to one inquiry. So, the lesson learned is to apply for bad credit car loans Tucson Arizona only when you are actually ready for it. Not doing so may make your credit problem worse.
#5 A shorter loan period is beneficial
If you compare five-year loan with a three-year one. you will find lower monthly payments for the former. However, the interest rates are lower for shorter-term loans. This may translate into paying overall less for your car. This will also give you a few extra years wherein you don’t need to make car payments. Helping you focus on paying off other loans to improve your credit score.
#6 Old vehicle or new vehicle?
It is automatically assumed that older vehicles cost less, but the reality is that older vehicles charge higher interest rates than new ones.
So, go for a new car if you have a bad credit since they offer the best financing. On the contrary, browsing for old cars may get you one that you can purchase outright cash down. In this case, you won’t need an auto loan at all.
#7 Get hold of a cosigner
This is easier said than done because a co-signer is the one who will have to make your payments in case you are unable to pay your bad credit car loan. But, if you can lay your hands on one. There is nothing like it since it will not only get you bad credit car loans Tucson Arizona at a reasonable interest rate but also boost your credit score.
You require a cosigner if you:
- have a bad credit.
- don’t have the minimum income to raise an auto loan.
- have variable income.
- debt-to-income ratio being high doesn’t qualify for a loan.
What you shouldn’t do when looking for an auto loan?
Beware of misleading commercials:
There are commercials from local car dealers especially targeted towards people with a bad credit score. Beware of them, since these dealers generally end up charging more money for cars than they are worth.
And buying from such dealers doesn’t improve your credit score since they don’t report to the credit reporting agencies. So, the credit score remains the same, even when you timely make all your loan payments in full.
Beware of false verbal promises:
We have all experienced shop-talk and have been taken in by the smooth-talking salesman. Similarly, the vehicle salesman may tell you things that you want to hear about your car loan and promise you the moon.
However, it is all verbal rhetoric and you should not base your decision on it. Get everything in writing before you agree to the terms.
Beware of misinformation about credit score:
The auto loan lender may misinform you about your credit score, enticing you to go in for higher rates of interest on an auto loan.
So, go well armed with your actual credit score and base all your options for financing on it. This entails doing some research to find out what rates you are eligible for.
Beware of extras:
Extras, like extended warranties, GAP insurance, and credit life policies, are an extra financial burden that you can highly avoid since these are not necessary. So, be careful not to take them.
Beware of driving off the lot without finalizing auto financing:
Some dealers may allow you to drive off the lot without a final approval of your auto loan, making you believe that it will come through automatically.
However, they will later inform you that your loan has not been approved, compelling you to agree to higher finance rate. Lesson learned is never to leave the showroom in your new car without final auto loan approval.
What is the interest rate for bad credit car loans Tucson Arizona?
How much interest an auto company can charge you for an auto loan is regulated by Arizona state law (per 44-291 (G) ARS). If you are lucky, you may find a lender who charges a lower rate than those set by the state.
So, it is best to shop around and also not settle for a lower interest rate, until you understand all the requirements for the best auto loan.
How much interest is charged?
In Arizona, you can be charged 17 percent of the maximum monthly finance rate for an auto loan of $500 or less. It is 15 percent for a loan between $500 and $2,500; 13 percent for a loan between $2,500 and $5,000; and 10 percent for all loans higher than $5,000.
A late payment or default on payment attracts penalties stipulated in the payment terms that may include late fees or more interest charges.
How the penalties work
However, Arizona law lays down that you cannot be charged more than five percent of the unpaid balance as a penalty. And these penalties need to be disclosed in your contract.
What’s worse, the auto loan company is empowered to repossess your car on loan default. The Arizona law gives 11 days after the payment due date to pay back the loan if you have missed a payment. This stringent law can be circumvented by taking your lenders into confidence and seek their help in case of any such setback. Keep this in mind when applying for bad credit car loans Tucson Arizona!
Getting bad credit car loans Tucson Arizona is difficult, but not impossible. There are many banks and other sources that offer auto loans to people with bad credit. However, if the need is not urgent to buy a car, the best approach is to improve your credit score first before buying.