DO you plan to apply for a car loan yet hesitant because of your bad credit history? Before you take another step read on the rest of this article to find out more about bad credit car loans.
Applying Through a Co-Signer
Indeed, you may consider getting help from a co-signer with good credit to improve your chance of getting approved and to enjoy a lower interest rate. However, consumers need to be very careful with this kind of arrangement.
Some scammers may apply your loan, using your co-signer as the primary borrower. Yes, your loan will get approved but you will not be able to improve your personal credit report because the car loan is not in your name at all.
To avoid being tricked, see to it that you and your co-signer are both present during the signing of the contract. Carefully read the Terms and Conditions of the car loan and if there are statements that seem vague, do not sign up the loan without clarifying what every statement means.
Car Loan Dealer Tactics
Some car dealers that offer bad credit financing may hand you an application and assure quick approval to convince customers to do the purchase from them. You might get the wrong idea that the loan has already been approved, when in fact your application is still yet to be submitted to the bank or lender.
Two weeks later, the car dealer will call informing you that you have not been approved for the low rate because of your bad credit score. As a result, you get stuck in a bad credit car loan with a high rate of interest.
Avoid Being a Victim!
Avoid being a victim of bad credit car loan scams and rip-offs by being aware of their tactics. Remember that you can find a reasonable car loan despite having bad credit if you do your own research and if you meet the lender's requirements.
For instance, you must have a stable job to make up for having a low credit score. A stable employment will give a potential lender the assurance that you are capable of keeping up with your monthly auto loan payments.
It's also a good idea to reduce your credit-to-debt ratio. Minimize the use your credit lines at least six months before applying for a bad credit car loan. Pay off your existing charges especially if you own credit cards. Such a move can boost your credit score. It will also create a good impression when a lender looks into your credit report.
Here is another great tip: Order a copy of your credit report from the three major credit bureaus so you don't need to guess what your exact rating is. Predatory lenders and car dealer financers may make you believe that you have a much lower credit score just to charge you with much higher rates and fees. When dealing with a potential lender and car dealers, bring the copy of your report with you to show that are aware of your exact credit standing and that you know the kind of deal that you deserve.