3 Things That Can Improve Your Chances Of Getting Approved For A Car Loan When You Have Bad Credit
Posted on: 31 May 2017
If you have bad credit and are driving an old beater car that has seen better days, you may be wondering how you'll be able to afford another vehicle when your old car reaches the end of the road. It's important to be proactive now so you can be prepared for the inevitable. Here are a few things to do.
Don't apply for car financing until you are ready
You may be wondering how difficult it would be to get approved for car financing, which could tempt you into applying now just to see if you would be approved. However, each time an inquiry is made for your credit report, a ding gets placed, which can lower your credit score. Do not apply for car financing until you are ready and, when you do apply with a car financing company for bad credit, limit your inquiries to one or so a month so your credit score is not too adversely affected.
Study your credit report to find and fix errors
Get a credit report from each of the credit bureaus. According to the Federal Trade Commission, you are entitled to one free copy from each of the three credit bureaus every 12 months. Look through each credit report to find discrepancies and fix them. Perhaps an entity reported that you owed them more than your records show or that you failed to make payment in full when you can prove that you did. Repairing these types of errors can improve your credit score. Also, be sure to make all payments on time so you'll get no more dings to your credit score while you work hard to repair the errors.
Save for a hefty down payment
Most car dealerships will give little-to-nothing as trade-in value on old beater cars. And if your plan is to drive your current car until it dies completely, a car dealership could deny you any trade-in value at all. Without anything to trade-in, you'll need to give a down payment in most cases. The more of a down payment you have to give, the less your monthly payments will be, the lower your interest rate will be, and the more likely the car financing company will approve your application when you have bad credit. Get used to making car payments every month by adding an imaginary car payment amount to your budget before you actually secure a loan. This is an effective way to save money for the down payment.
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