You Don’t Need Great Credit To Get a Car Loan — See How
(RepublicanReport.org) – Credit ratings comprise just three digits but can have overwhelming significance in terms of one’s personal finances. If it’s not where lenders deem it should be, borrowers could have difficulty getting credit for the most important purchases in life, such as a house and a car.
If your credit is less than great, don’t despair. There are ways to secure loans even if the number isn’t ideal. These are the most important steps to get a car loan when you don’t have a great credit rating.
Know What You’re Dealing With
If you know your credit score isn’t good, it’s understandable that you’d be hesitant to do the research to get the bad news. However, there are suitable options out there; you just need to look.
Credit scores run from 300 to 850; the higher your number, the better. Anything over 800 is considered excellent, so you shouldn’t encounter any problems if you’re lucky enough to be there. Anything above 670 will be sufficient for many lenders to give you a car loan.
However, if your score is really low, and especially if it’s lower than 580 or so, there may be some challenges.
Look at Your Debt & Income Levels
When applying for a car loan, a credit score isn’t the only thing the lender will consider. Two of the biggest factors that dictate your ability to repay a loan are income level and outstanding debt. If you have a good income and low debt, you may be able to get a car loan despite having a low credit rating; you’ll just likely end up with a higher interest rate. Make sure to highlight this to your lender when submitting an application.
Give a Down Payment if You Can
Following on from the last point, if your current financial situation is healthier than your credit rating, you can use this to your advantage by paying some of the cost of your new vehicle upfront. Lenders are more likely to approve a car loan application if they can see the borrower is in a position to kick in some cash to reduce the loan amount.
Before going into a dealership, look for a preapproval from a credit union or bank. This is a letter signifying a lender is willing to give you credit to purchase a car. If you have less than great credit, it’s one of the best things you can do to improve your chances of getting a car loan.
Just because you don’t succeed the first time you look for a loan, don’t give up hope. Instead, examine all potential avenues for getting credit, including online lenders and loans from the dealership itself. However, be aware of one caveat. Too many credit checks by lenders are not a good sign when applying for a loan.
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