Securing a Car Loan With Bad Credit: 4 Other Factors a Lender Might Consider

Bad credit happens, but it doesn’t have to stop you from getting financing for a vehicle. If you’re credit score is in a bit of a valley, it pays to remember that there are other factors lenders consider when deciding whether to approve your loan.

  1. Available Collateral


If you need an auto loan and you have a low credit score, then the value of the vehicle you’re purchasing becomes all the more important. This is because the market value of the car is what a lender would hold as collateral should you be unable to pay back your loan. The higher the value of the vehicle, the more attractive a risk you may look to a potential lender, even with poor credit ratings.


  1. A Cosigner

If you’re shopping for bad credit car loans, maybe finding a cosigner would be wise. This is somebody with good credit who will become responsible to pay off the loan should you find yourself unable to do so. This helps provide the lender with some security in their investment and reassurance that they will be paid back. A cosigner is usually a close friend or family member.

  1. Expenses Versus Income


If your expenses (other loan payments, mortgage payments) are moderate and your income is higher, than a lender is more apt to view you as a low-risk borrower. This could mean picking up that second job for evenings and weekends, or it could indicate that you should get whatever school loans and mortgages paid off that you can.


  1. Down Payment

If you can save up the cash, making a solid down payment may help demonstrate for a lender that you are serious about making good financial decisions. Another benefit to a down payment like this is that it reduces the principal loan amount, so there’s less money on the line and the lender has less cause for concern.

Despite your bad credit, these aspects of your finances are taken into consideration by lending institutions when you’re applying for a car loan. The above suggestions should be helpful in scoring the funds you need.

How to Secure the Best Car Loan

You may have spent countless hours looking for the perfect new car and are eager to move into the actual car buying process. However, if you plan on using a car loan to help pay for your new vehicle, then you should spend an equal amount of time looking for car loans. Here is how you can make sure that you secure the best car loan available to you.


Pay Attention to the Pricing


When you are looking for a car loan you should take into account how much you will have to pay per month as well as how much the loan costs overall. This can help you avoid falling for bad deals, which are more prevalent than many people realize.


It is important to have an idea of how much you are able to spend before you begin shopping around for a car loan. Having a budget in place can help you avoid getting locked into an adverse deal.


Loan Duration Matters


Another simple way to ensure that you are securing the best car loan is by paying attention to the overall length of the loan. Generally, the shorter the loan is the better. Some people hesitate about getting shorter loans because it tends to mean the payments are more expensive month to month. However, if you want to save more money in the end, then you may want to consider getting a short car loan.


Sometimes people choose longer loan terms since it allows them to space out their payments. The biggest downfall to longer loan terms is that the interest rates can add up over time.


In the end, the most important thing is to choose a car loan that you can afford to pay for each month. As you can see, purchasing a car loan takes just as much thought as buying a car. By studying the overall costs and the loan length, you will be able to find the best car loan.

Leasing a Car: When is it Better than Buying?

If you’re in the market for a vehicle, deciding between buying and the financial alternative of leasing is not always easy. There are some benefits to car leasing that merit looking into before making your decision.

Access to Higher Quality Vehicles for Less

Without going into serious debt, leasing should place within your grasp better, more expensive vehicles than your pocketbook could normally handle.

Minimal Repair Costs

In most cases, leasing puts you under the dealership’s warranty, which means that you’re not fully responsible for all repairs and maintenance, like you would be if you bought and owned the vehicle.

Smaller Down Payment

Your down payment on the vehicle is usually significantly lower when you’re leasing rather than buying, so in terms of fronting the cash, this is an appealing option. This should also keep you from being what’s called upside down in the loan, which means you owe more on the car than its worth.

Lower Monthly Payments

Generally, the monthly car payments will be more manageable when you’re leasing instead of attempting to buy, because you’re not paying as much principal. Maybe you have one of those minimum wage jobs that struggles to make ends meet the way you need it to; leasing a vehicle rather than buying might just help.

Frequent Vehicle Variation

If you’re someone who is normally interested in a new vehicle every couple of years or so, then you may find leasing is for you. Leasing is a great option if you want to switch out vehicles and have something different more often than if you were buying. It’s pretty easy: when you’re finished with the vehicle, it’s a simple drop-off at the dealership.


Owning a vehicle is appealing, but it’s true that car leasing holds some benefits of its own. With lower payments and less hassle at trade-in, it may be that leasing will be better for you and your circumstances, so don’t dismiss it.

Getting a Car Loan With Bad Credit

You know you probably need to replace your car, but your credit is not stellar. It is a mistake to assume that your low credit score is a deal breaker when it comes to financing your next vehicle, though. Dealerships handle bad credit car loans all the time, so don’t abandon all hope that you will be approved. All you need to do is prove that you are not as much of a credit risk as your score might indicate.


How Low is Your Credit?


Many people are unaware of their credit score. Maybe you assume that it is terrible because you had problems a few years ago. Before you come to the dealership, get a copy of your credit report. Not only may you be pleasantly surprised at your score, but you might also discover quick ways to raise your score. Be sure to correct any mistakes on your report that you find. If you catch them in time, you can get them corrected before you need the car loan.


How Much Do You Make?


If you have bad credit, you can often offset it with proof that you have a significant amount of disposable income. Credit only shows your payment history. It does not show your present or future. Your pay stubs, however, can give the dealership a fuller picture of your actual ability to honor the terms of the loan.


How Much Can You Put Down?


You can also increase your loan approval chances by making a large down payment. A large down payment can also help you get better terms on the car loan. This lowers the total amount you are asking to borrow, which makes you less of a credit risk to the dealership.


Your credit history does not have to end your chances of getting the car you want. If you can prove that you can afford the vehicle, your loan application is likely to be approved.

Overcoming Bad Credit in the Search for Good Car Loans

You might be able to survive without a car, but that doesn’t mean it’s convenient. When you need a vehicle to get to work, that’s the reality of your situation. Unfortunately, some lenders tend to care more about a credit score than they do your personal situation. Bad credit car loans are a necessity for many shoppers, so it’s important to know how you can get a good loan when your financial history is a little bit lacking.


Don’t Lose Hope


If you assume your credit is going to ensure you’ll never get a good rate, you’re already admitting defeat. If lenders and dealerships avoided everyone with bad credit, car sales would probably go down significantly. Keep on searching and you’ll eventually find someone willing to give you at least decent terms.


Shop Local


Bad credit car loans are difficult to get when you’re going through a faceless bank, but become much more realistic when you work with an actual person. This allows you to discuss your situation beyond the bad credit score and make your case for why you’re not a high-risk borrower.


Target Overall Terms


Once you start talking about monthly payments, you’ve already lost your leverage. You should discuss the overall terms of the loan so you know how much the car will actually cost. With long-term numbers established, you won’t get tricked by low monthly payments and high interest fees that end up being very costly as the years go by.


Skip the Bells and Whistles


Some lenders will try and tempt you with add-ons that don’t actually save you any money. Stay focused on the cost of the car, the interest rate and and the terms of the loan.


A low credit score can hold you back, but it can be overcome. Look for car loans with reasonable terms, keep your eyes on the prize and you should be able to get what you need.

What to Do if You Can’t Pay Your Car Loan

If you’re struggling to make your car loan payments, it’s important to know that you’re not alone. The number of people failing to make their payments 60 days after purchasing a car with bad credit car loans has actually been on the rise recently. Fortunately, there are things you can do to avoid losing the valuable asset that you just purchased. The dealers who sold you your car know how important it is to you, and they’re ready to work with you to ensure that you can get past this temporary challenge and improve your quality of life.


Dealers are willing to issue bad credit car loans because they know that having a car opens up major opportunities for a person to improve his or her quality of life and get new employment. Everyone goes through a tricky period of time after purchasing a new car when they are suddenly saddled down with car payments but the actual benefits of having that car haven’t fully kicked in yet. Don’t worry – people involved in your car purchase have long-term vision and they know that things will soon get better for you. That’s why it’s important to be honest with your lender and the dealership about your situation.


You can often make a deal with your lender to restructure the loan so that the payments are less onerous. You might also be able to take advantage of a temporary hardship program to put some payments off until you get on more solid financial ground. Whatever the solution, the most important thing is that you communicate with everyone involved as soon as you start experiencing difficulties.


Remember, purchasing your car with bad credit car loans was a good decision, even if you’re struggling temporarily. You made the major step of acquiring a vehicle, and your quality of life will soon improve. In the meantime, work closely and openly with your lenders and the dealership to find a way to make your car loan payments manageable.

4 Costly Mistakes to Avoid When Getting a Car Loan From a Dealer

When getting car loans, the most common financing option is to work with your dealer. We can offer you great terms and put you in a safe and reliable vehicle. However, be sure you do your homework to work out the best deal for you. Avoid these costly mistakes and you’ll be alright.


  1. Not Knowing Your Credit Score


A seedy dealer will try to tell you your credit is worse than it is, but even with a reputable dealer like us, knowing your credit score will put you on equal footing so you can negotiate a price on your own terms. You should know not only your score but any blemishes you might have. If you explain good reasons for a setback in your score, we may be willing to work with you despite the number.


  1. Not Negotiating Loan Terms in Pieces


You don’t want to negotiate your loan in terms of monthly payments alone. You’ll likely end up with a longer loan period and have to pay a fortune in interest. Instead, talk to us about each section of the process separately – trade-in value, price and financing. You’ll have a good chance at getting a good car at a great price.


  1. Not Choosing Correctly Between Low-Interest Loan and Cash Rebate


If you have great credit, you may be offered a low-interest rate for car loans, but should you take that over a cash rebate? Do your research and figure out which will save you the most money as offers vary.


  1. Not Purchasing Add-Ons Separately


Paying for add-ons up front instead of adding them into your loan can save you hundreds of dollars over the term of your financing. If you can’t resist things like fabric protection and extra sealant on your paint job, be sure you have the extra cash to put towards it on the down payment.


Car loans don’t have to cost you a lot of money on top of the price of the car. By avoiding these costly mistakes, you can keep your financing at a price you can afford so you can pick the best vehicle for your budget.

The Advantages of Leasing a Car

If you are new to driving, you may be tired of riding around in other people’s vehicles. There is nothing quite like having your own car instead of asking to borrow one that belongs to another person, such as one of your parents, a sibling or even a friend. However, you may feel like you do not have enough money saved up to get the kind of car you want.  Instead of paying in full, car leasing is an option. It is convenient for those who want to make payments on a monthly basis rather than pay everything at once.


You Can Make Affordable Monthly Payments


You may be able to afford a set amount of money each month for the vehicle. It is best to choose a car based on what you can afford because the monthly rates vary depending on the cost of the vehicle. Knowing that you can drive around freely on your own in a vehicle that you will eventually own is something that feels great. It is even better when you are not stuck paying too much money each month. At our dealership, we are always upfront about the monthly fees so that you know what to expect when you do start to make those payments.


You May Not Have to Make a Down Payment


While a down payment may be required for some options, it is not necessarily mandatory. You may have an opportunity to drive off the dealership lot without making a large down payment. If you do not have a whole lot of cash to put down because you have other bills and expenses, being able to avoid that large down payment because of car leasing is convenient.


There are plenty of great reasons to decide to lease a vehicle. It is a way to save money upfront while still getting a beautiful and reliable car to drive. If you are interested in leasing, come down to our dealership and let us help you get started.

Auto Loans to Match Your Financial Needs

The search for a new car carries with it plenty of financial implications. Any dealership you go to has plenty of offers for you, but that doesn’t mean you shouldn’t do your own research in order to find what’s best for you. Auto loans come in all shapes and sizes, making your research and your understanding of what you can afford all the more important.


Find a Loan with Low Interest Rates


The annual percentage rate (APR) is of the utmost importance when it comes to what your will truly pay in the end. The APR for any loan literally shifts on a daily basis and is based on the length of your loan agreement. A shorter-term loan results in lower interest rates but a larger monthly payment, whereas you have the options to stretch out that same loan and pay less monthly, but your total cost in the end will be higher. Find out how you can lock into the best interest rate possible for your situation.


Look at All the Options Available to You


The same way you shop around for the best car at the best price, you should shop around for the best loan. There are plenty of lending options – from big banks and the dealership itself, to smaller banks and credit unions – so it’s not a situation where you have to settle. Ask questions, and head to your bank or dealership to talk to talk to someone in person. It seems simple, but it’s easy to become overwhelmed with all the options available, making your research all the more necessary.


Understand Where You Stand Financially


Monthly payments, total cost once the loan is paid in full, what type of credit you have, and much more will have an impact on what type of loan you works best for you. It all starts and ends with what fits into your budget, so the decision is and should be based on your full understanding of your finances and what works best for you.



Before You Get a Car Loan, Read This

If you are like most car buyers, you will finance your new car purchase. You are probably also excited. Don’t let your excitement cloud your judgement. Whether you are applying for a loan using your excellent credit or searching for bad credit car loans, you should keep some things in mind.


Get the Best Interest Rate


Probably the most important thing you can do to save money on your financed car is to negotiate the lowest interest rate possible. Whether you pursue financing from banks, credit unions, financing companies, or the dealership, a lower interest rate could save you thousands over the life of your auto loan. As such, if you are going to negotiate any part of your new car purchase, you probably want it to be your interest rate.


Pick a Good Loan Repayment Date


If you can, think about what day of the month is best for you to make your loan payment. Try to pick one when you will have the funds immediately available. If you typically get paid on the 1st, you might not want your loan payment to be due on the 30th. Because of late fees and charges, you don’t want to be late with your payment.


Ask About Loan Fees


While you might know the price of your car and the interest rate, you might not realize all the fees associated with your loan. Ask your lender for an explanation of any additional costs you will pay. In particular, check if there is a penalty for early loan repayment. Since you will likely want to make an extra payment or two a year to reduce the overall amount you will pay on your loan, you want to be sure you aren’t diminishing any benefit with early payment fees.


If you need a regular loan or a bad credit car loan, you should consider these three tips to get the best loan possible.