You Won't Believe These Easy Tips for Getting a Car Loan
Bad credit and applying for loans can make you feel like you’re constantly auditioning for American Idol and Simon Cowell is reducing your future dreams of a singing career to tears and questioning your entire life goals.
When you have bad credit, trying to get a car loan is anything but a cake walk or an American Idol audition. Whether you made a few payments late, maxed-out your credit card, or bought more car than you actually needed and couldn’t keep up with payments, it’s a scenario that none of us are strangers to.
Now that you’re in a better financial situation, you’re ready to buy a new car. But how do you get one when your loan depends entirely on your credit, which is less than stellar.
Don’t stress. It’s entirely possible to buy a new car even with spotty credit history.
Perspective
Put yourself in your lenders shoes. Walk around for a bit. Get a latte. Think about some stuff. Like how bad it is you own a selfie stick. Or wondering if you should change your favourite colour from green to blue. But also, think about how your lender views you. Your potential dealer and lender doesn’t see you as burden. They look at your situation with value. A new car has more value, therefore, more collateral that can be reclaimed if the buyer fails to make payments (no pressure). There’s also an added bonus of the new-car buyer actually keeping up with the payments. When you buy new, your money isn’t diverted to costly repair that sometimes befall older models. So no excuses!
Prep Early
Like getting ready for a really big test when you were back in school, if you have bad credit but want to by new, you should begin planning for that new purchase well in advance. This doesn’t include flashcards, but it does involve homework. Do you know what your score is and where you stand in your credit report? It’s best to have a good idea of what it is and what you’ll look like to your potential lender, but they key is: do this 3 months in advance (hence the prep). This is so you can take action on any outstanding items. This way, you’re being proactive about your report and any items on it that might impede you from moving forward with your car loan.
Pre-Approval
Get ready: because your credit is bad, you’re likely going to be paying high interest rates. We know. It’s a bummer. The upside? You can seek approval from more than one lender. So, the next time you’re commuting to work, pay attention to the billboards or radio commercials that blare out catch phrases like “Bad credit? No problem?” (sound familiar?). Places like Yours Truly are designed around situations like yours and want to work with you to help you get back on the road. Don’t forget to check in with your local credit union or bank; they may be willing to approve you since you already have an established financial relationship with them.
Bring Your Paperwork
While not always necessary, it doesn’t hurt to bring some important paperwork with you when discussing financing with your potential dealership. Think of it like an interview: you bring a resume and a copy of your cover letter and three references. Similarly, when you visit a dealership, you’ll want to bring along paperwork that establishes who you are, confirm that you do, indeed, have a job, have a history of making payments on time, and have friends or family the dealership can contact to find you should yu stop making payments. These items can be a pay stub, your utility bill, driver’s license, and personal references.
Stay in Your Price Range
Last, but not least, remember to stay in your lane for your price range. Most new car buyers know they can afford the monthly car payment, but they’ll sometimes ignore the big picture. Just because you qualified for a larger price tag, doesn’t mean you have the budget for it. While it’s going to be a nice ego stroker, it won’t do you any good in the long run (besides, think of all the donuts you can buy with the money you save).