Getting car finance with bad credit. A guide for today’s modern society
BY READERS DIGEST
17th Oct 2019 Home & Garden
In today's society, it's pretty difficult to get around without a vehicle in most areas of the country.
If you are looking for car finance with bad credit, it may be hard to get approved for a traditional car loan. In this situation, it doesn't mean that you won't be able to get a car. It just means that you might have to explore some other options and work a little bit harder in order to get qualified.
Guaranteed Approval Loans
In the auto industry, there are many dealerships that offer guaranteed approval loans for customers. These loans do not depend on your credit score or your payment history. Instead, they are simply based on whether you make enough money to make your payments. These dealers are sometimes referred to as "buy here, pay here" dealers. You might be required to make a payment every week at the dealership. The drawback to using this type of loan is that they have high interest rates. Since the lender is guaranteeing financing for anyone who makes enough money, they are taking on a certain amount of risk. They know that a certain percentage of borrowers are going to default on their loans. This means that they have to charge enough to make up for the ones who default. As a borrower, this can provide you with the financing that you need to get a vehicle.
Use a Cosigner
When you have poor credit, another option that you may want to consider is getting a cosigner. The cosigner will sign the financing agreement with you and lender will check the cosigner's credit and income. If the cosigner has good credit, it will improve your chances of being able to get a vehicle. If you default on the loan, the cosigner will be responsible for making the payments. This means that you should only get a cosigner if you feel confident that you'll be able to make your payments.
Shop Around
If you don't get approved the first time for an auto loan, you should not simply give up. Not every lender uses the same lending standards. What may be unacceptable to one lender may be perfectly fine with another. When you have bad credit, you may have to pay a higher than average interest rate or make a bigger down payment. However, you can still get approved for financing even if you have a bankruptcy or some other blemish on your credit report.
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