Qualifying for any type of auto loan you have poor credit is never a fun experience, mostly because you will probably run into multiple lenders that will simply reject your application. However, there are a few options that you can consider that can help you get an auto loan with poor credit, such as the two listed below.
Consider A Long-Term Loan
One of the easiest ways to get an auto loan with poor credit is to consider a long-term loan. In the past, the most common car loan that you can really get was a 60 month, or five-year loan term. However, there are now loan terms that can go as high as 120 months.
The reason that considering a long-term car loan can help you get approved for a loan even if you have poor credit is the fact that your monthly payments will be lower, which means that the lender will be more confident that you will be able to make your monthly payments. In addition, the lender also stands to make more money off of the extra interest that you will have to pay due to the longer term of the loan. However, if you do get a long-term loan, you will want to consider paying off the loan as quickly as possible as your finances improve simply because you don't want to waste a lot of money on interest payments over the life of the loan.
Consider Shopping At A Buy-Here-Pay-Here Dealership
Another option to consider if you are having a hard time getting approved for a car loan with poor credit is to look at some of your local buy-here-pay-here dealerships. Now, the reason a buy-here-pay-here dealership can help you is that they typically don't care too much about your credit and only really need to know if you have a steady income that can be used to pay for the vehicle you purchase. The reason that it is called a buy-here-pay-here dealership is that you are going to be making your payments directly to the dealership as they are the individuals that are providing the loan.
The downside to going with this type dealership is the will often have a higher interest rate on your loan. However, the good news is that even though there is a higher interest rate on your loan, every time you make a payment on time to the dealership they will be reporting that to a credit agency, which means that you are improving your credit. This means that the next time that you need to get a vehicle, you may have an easier time getting approved for a more attractive loan.
Getting a car loan when you have poor or bad credit does not necessarily have to be an extremely difficult or impossible task. Considering a long-term loan and shopping at a buy-here-pay-here dealership are both effective options to consider that can help you get an auto loan with poor credit.Share
7 June 2017
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