For interested buyers with no credit or bad credit, there are many car dealerships that are actually offering financing. It is feasible for those with less than perfect credit to have car loan but still, it will need due diligence to ensure that the terms of the loan would stay affordable. The tips that are to be discussed below will help interested individuals to have car loans with low credit score.
Number 1. Know about your score – the first step for potential car buyers with poor credit is figuring out exactly what their score is. Consumers have different ways of accessing their credit scores. Well the truth is, being able to get a score of 650 or above is considered to be good credit but if you fail to reach it, you’re deemed subprime. Meaning to say, even if you receive a loan, the interest rate may be high.
Number 2. Save on down payment – fact is, simply by putting a down payment on the vehicle will help buyers to get low interests even if they have bad credit. Most of the time, you will be able to be offered with favorable terms if you made a 10 percent down payment. Meaning to say, buyers who are interested to finance a 10k dollars car can expect to put a 1k dollars down payment, especially if they have 650 or lower credit score.
Number 3. Consider looking for a cosigner – if you have a close friend or trusted relative who has good credit score and willing to cosign for car loan, this can give you more affordable package for financing. On the other hand, this person should undergo credit check and at the same time, agree to serve as guarantor in case that the loan isn’t repaid.
Number 4. Look around – those with good credit rating are paying 3 to 4 percent interests while for subprime buyers, they typically pay 9 to 10 percent interests on car loan. Buyers should know about these figures too when they are applying for financing. Before you get financing, make sure that you have checked every offer you receive because there’ll be time when you will get 10% interests or higher which is not totally worth of your time.
Number 5. Do the math – it is the buyer’s responsibility as well to know how much they can afford in addition to educating themselves of the expected interest rate. What this mean is, you must not be focusing solely on the monthly payment you can afford but more on the targeted purchase price as per total amount you’re expected to pay to ensure that you won’t bump into any problems.