As an adult with responsibilities, you can hardly afford to be without a car of your own. Sure, having a car allows you to do all of the fun things in life like visiting friends, driving to the movies, or spending a leisurely day at the mall. But, it is also required equipment in most cases if you want to hold down most types of jobs, visit the doctor, or run errands around town.
If you are like most people, there is no single reason why you need to buy a car: there are about a million reasons. And yet, despite the importance of automobile ownership, not everybody can qualify for an auto loan.
The main reason why a person might not qualify for an auto loan is their credit score. The FICO credit scoring system was developed to help lenders have an easy way of assessing the risk they face for loaning money or extending credit to various consumers.
In many ways, the FICO score system serves its purpose well: it helps lenders make quick decisions about whom to offer an auto loan to and whose application reject. However, it can definitely work against you if you have a low credit score. Fortunately, even with a bad credit score, you can find online lenders willing to extend you a car loan.
If you want to get auto loans with bad credit online, here are 5 tips to help you get qualified:
1. Pick out a car that you can buy at a reasonable price:
One thing many bad credit consumers who are interested in buying a car overlook is the fact that the price of the car they want to buy determines the loan amount they need. And, a larger loan amount means a worse chance of getting approved. So, find a car that is at the lower end of the price scale that will still make you happy.
2. Do what you can to scrape together a respectable down payment:
The more money you can come up with for a down payment, the better your chances of landing a bad credit auto loan at an attractive interest rate. Why should this be? Because, not only does the down payment reduce your loan amount (see #1 above), but it also signals to the lender that you are shouldering some of the risk of the loan. In other words, if you were ever to become unable to repay the loan, the lender would experience less of a loss.
3. Find 5 bad credit auto loan lenders’ websites online:
You will improve your chances of finding the right car loan deal if you apply to multiple lenders. Look specifically for “bad credit auto lenders” to find those that specialize in working with folks in your situation.
4. Research those lenders’ names in discussion forums and chat rooms:
Do not just rush out and apply just yet, however. Do your homework on those lenders. Go online to discussion boards and the like and search their names. Make notes on any positive or negative comments that others have on these lenders.
5. Commit to yourself that you will apply to at least 3 of those lenders:
Now, choose your top 3 and start applying. Remember, it is important to apply to all 3 of them. No reason why you should skip over an opportunity to get yourself the best auto loan rate.
Try these 5 tips as you land yourself the best deal on an auto loan, even with a bad credit score.