Do you have bad credit? Don’t worry, you are not alone. Did you know that more than 68 million people have a credit score of less than 601? Times are tough and the economy is not the best. However, you can still get an auto loan even though your credit has seen better days. Things have changed, and lenders across the country are giving second-chance financing to those who have fallen on hard times.
Financing The Future Not The Past
Many people have circumstances that occur that are out of their control. Did you have a major sickness that put you behind? What about the loss of a job? There are so many things that can happen in life that can take you backward. If you have charge-offs, slow pays, repossessions, foreclosures, bankruptcy, or even divorce, then you can still get an auto loan. The key is not in the credit but your ability to repay the loan.
Documenting Your Approval
In a loan where the credit ranking is prime, the party will not have to produce anything other than pay stubs. However, when dealing with a bad credit auto loan, you will be required to produce quite a bit more documentation. First, the lender will want to see numerous pay stubs and may still call the employer to verify employment. They want to have a down payment, identification, and a list of references. They will also want a utility bill to verify residency. The documentation list is quite extensive, but they require these to get funding.
Finding a Car You Can Afford
Bad credit car loans often have higher interest rates. This is because the lender is taking a chance on you. It is risky loaning money to someone who has had issues with money management in the past.
Another problem that most people have is finding a car that fits within their budget. You should set a price limit and never exceed that when going to the dealer. What the dealer thinks you can afford and what you can really afford are two different things. Using a monthly car loan repayment calculator can help you to educate yourself before you go to the lot.
Rebuilding Is A Slow Process
Rebuilding your credit is a slow process that must be done. It can take years to get your credit where it needs to be. Thankfully, an auto loan can help. It can get your credit going in the right direction. Unlike credit cards, an auto loan is a big debt. It ranks higher on the credit reports. If you have a solid history of payment, then it will improve your score. Don’t be afraid that getting a loan will hurt your credit, it will do amazing things by rebuilding it.
Signing on for a car loan is a major commitment. Your terms can be anywhere from 36-72 months. Having a good down payment will reduce your monthly obligations. After paying faithfully on your loan for a period of time, you can refinance and get a car loan with better terms. You are not the only one with bad credit, even though it may feel as if you are. You can get an auto loan.