Cars are a must for everyday life. In many parts of the country, the only way to get around is via an automobile, and for many people, having a working automobile is also an essential part of their livelihood. The problem is that owning a vehicle may seem out of reach for some, especially for those who have bad credit. Bad credit is considered to be any credit score below 600. Those with bad credit, or even just poor or fair credit, may have trouble obtaining an auto loan. Here are tips for purchasing a car for those who have bad credit.
Check Credit Report
The first thing that someone with bad credit should do before seeking an auto loan is take a look at their credit report. A thorough examination may come up with a few mistakes that can be corrected. Those who find errors can dispute them with the three credit bureaus. It can take up to 60 days for an error to removed from a credit report; however, removing an error can lead to a higher credit score. This can make a big difference when getting an auto loan.
Getting financing for a car may be difficult for those who have bad credit, but it's not impossible. Shopping around is a must for those who have low credit scores. There are plenty of bad credit auto lenders out there who are willing to work with those who are looking to buy a car. Some dealerships are also more likely than others to work with those who have credit problems. Getting pre-approved for a loan may also be a good tactic for those who are rebuilding their credit. Credit unions and banks are often willing to lend to those who have bad credit.
Be Prepared For High Interest Rates
When it comes to auto loans for those with bad credit, higher interest rates are pretty much a given. Interest rates for those who have bad credit are on average around 14.75 percent. There are a few things that can be done to get lower interest rates. Newer cars tend to have lower interest rates than older cars. Going with a shorter term loan can also mean a lower interest rate depending on the lender.
Purchasing a car with bad credit is something that is possible. However, it's not always easy. Those with bad credit should check their credit reports before purchasing a car. Catching errors in the report can mean a higher credit score. Shopping around through various dealerships and looking at multiple lenders can ensure the best financing available. It's also important to be prepared for high interest rates. With bad credit, it's likely that the interest rates are going to be higher than average.