When you start shopping for a car, you might be more concerned with additional features and specialty paint jobs than you are about the monthly bill. Unfortunately, the wrong financing can cost you dearly. Compound interest never sleeps, which means that you might be paying much more than you should if you work with the wrong lender. I want to help you to make great financial decisions, which is why I created this website. However, if you can remember a few tricks and keep those payments to a minimum, you can drive away with the car of your dreams without breaking the bank.
Whether you are a first-time car buyer or are seeking your tenth automobile, an auto loan is within reach of everyone. If you have bad credit, however, you do need to put a bit more work into preparing for auto loans. While bad credit doesn't prevent you from getting the vehicle of your dreams, it does take more effort. Follow the below tips to be prepared for an auto loan no matter how bad your credit may now be.
Save for a Down Payment
Not all car lots will require that you have a down payment. However, if you have bad credit, you will almost certainly be asked to provide a down payment, which will vary depending on the loan company, the cost of the car, your credit history, and your unique financial situation. It doesn't hurt to check with an auto loan company to see what their individual preferences are. Generally, the more savings you can acquire for your down payment, the better.
Assess Your Finances Realistically
The biggest mistake a car buyer can make is overestimating how large of a car payment they can handle. Imagine the worst case scenarios in your personal finances, and try to have a cushion in case you lose a job or face unexpected financial emergencies. That way, you will be able to afford the car payment without stressing even in difficult times.
Monitor Your Credit Report
Get a free copy of your credit report. You are entitled to a free copy of your credit report at least once per year from the three major credit bureaus: Experian, Transunion, and Equifax. Also, if you are turned down for a credit card or loan, you can get a free credit report from the credit bureau the company used to make that decision.
Once you receive the credit report, look on it to see which negative information is bringing down your credit score. If possible, try to contact each company to work out a payment plan to turn the negative mark on your credit score into a positive one. If you do this for six months or more, you may be able to turn your credit report around before securing your auto loan.
Finally, keep in mind that the best way to ensure that you qualify for an auto loan is to save money before you visit a car dealership. By having a larger down payment, you will likely be able to get a car loan under the terms you want, and you can soon be behind the wheel of your new car!
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