One of the bigger purchases that you will ever have to make is when you decide to buy a new or used car. When you are looking to get a new car, you will likely find that the prices of a car make it hard to pay for the entire vehicle cash. To buy a car, one of the options that you will have would be to take out an auto loan. Similar to any other type of lender, banks that provide auto loans will pull a credit score for the borrower. If you have poor credit, the letter might not provide you with the loan. However, there are several ways you can get still get a loan to buy a car, even if you have poor credit.
Get Dealer Financing
One option you have for a bad credit loan when you are looking to get a loan to buy a car is to get a loan from the dealership. Most major car companies today have their own financing departments that can provide loans directly to buyers. Car companies are often willing to offer loans to people will lower credit scores as it will help to ensure that they make the car sale. However, these rates and fees tend to be higher than loans provided by traditional banks.
Put More Money Down
When you are looking to make a purchase on a new vehicle, most lenders will expect that you put forth some form of a down payment. When buying a car, a down payment is typically around 10 to 20% of the total purchase price. While this is the standard for someone that has good credit, those that have bad credit could still obtain a loan if they’re willing to put forth a larger down payment. If you can afford a down payment of 30% or more, you will be perceived as a lower risk and could receive the financing you need to buy the car.
As with any type of loan, a great option for getting a loan with bad credit is to get someone to sign the loan with you. If you have a friend, spouse, or other party that is willing to co-sign the loan with you, they will be taking on responsibility for the loan. In the event that you miss a payment, the co-signor will be obligated to make the loan current. Because of this, if you have a co-signor that has a good credit score, you will be able to qualify for an auto loan even if your credit is poor.
Finally, when you are looking for an auto loan when you have poor credit, you could obtain a loan if you are willing to shop around and find a great loan. There are many different banks, credit unions, and finance companies that are active in the auto lending industry. All of these companies have different methods for underwriting a car loan. Even if you have poor credit that leads to a rejection from one lender, another lender may still be willing to offer you a loan. Not only will then help you to get approved for the loan, but you could also receive a better interest rate.