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Where can i get a loan with very bad credit
How to Get a Car Loan with Bad Credit
Getting a car loan with bad credit really depends a lot on the current lending climate as well as factors such as your income, how long you’ve been at your current job, and how much debt you currently have.
Back in the good ole days before the financial crisis (2005-2007), people with terrible credit were easily getting financed. Shortly after the crises, even people with great credit were having a hard time getting financed.
Be warned however – if you have bad credit, you’re way more likely to get ripped off – first by paying a much higher interest rate, and secondly by the car dealer who is trained to take advantage of your situation.
Step 1. Know Your Credit Score and Check for Errors
This may sound boring, but checking your credit score is vitally important. Not knowing your own credit rating is the dumbest mistake you can make when trying to get a car loan – you WILL be taken advantage of.
Step 2. Get Quotes from Online Lenders
Now you need to start fishing and see if you can get any lenders to approve you for financing. Online loan aggregators are your best bet, especially ones that specialize in sub-prime loans such as AutoCreditExpress.
Another good one is MoneyAisle.
Once you complete this step, you’ll know within a day whether you got approved by any lenders. Make a note of the best rates you were offered because your next step is to start comparing to other lending sources.
Step 3. Contact Your Local Bank and Credit Unions
If you were able to get approved by one of the online lending sources – that’s great. Now you have ammunition and can start comparing with other lending sources without being at a complete disadvantage.
The next step is to call your local bank (hopefully you have a long relationship with them). See if they will offer you car financing. You should also contact Capital One Auto Finance, which is known to offer financing to people with sub-prime credit.
Step 4. Dealer Arranged Financing
You should expand your choice to at least 2 or 3 different vehicles manufactured by different brands. The reason being – some manufacturers will offer sub-prime financing through their captive finance division and it’s worth finding out if you can get a loan through them.
The only way to get a car loan through a manufacturer’s finance division is to go through a dealer. You will want to contact the different dealers and see if they can beat the loan offers you already got.
Most dealers have relationships with several lenders that work with sub-prime borrowers. Hopefully, you have at least one loan approval that you can compare it to. Otherwise, you’re in a somewhat difficult situation.
Step 5. Regroup and Consider Your Options
If you were approved for financing, but at a very high rate – you need to determine if that is something you can afford and whether it’s worth it. If you don’t really need a new car, you should pass on it, save money and work on improving your credit.
You also need to realize that a car loan is not set in stone. You can always refinance after a year of making payments on time – at which point you should have a better credit rating and be able to qualify for a lower interest rate.
If you weren’t able to get financing through the sources listed above, you may want to look into getting a co-signer. This is someone who is willing to take the risk of paying off the loan in the event that you can’t make payments.
Usually, it’s a parent or other close relative.