If you have bad credit, it can be difficult to get a car loan. Lenders don’t want to risk giving money to someone who may not be able to repay it. However, there are ways that you can get a car loan even if you have bad credit. This post will discuss how to get bad credit car finance and what options are available to you. We will also provide tips on improving your credit score so you can qualify for better loans in the future!
Consider a bad credit car finance specialist.
If you have bad credit, your car financing options may seem limited. But there are ways to get bad credit car finance. One is to look for a bad credit car finance specialist. Some companies specialize in helping people with bad credit get auto loans. They may be able to help you get the loan you need.
Get a cosigner
Another way to get bad credit car finance is to find someone with good credit who will cosign for you. This means they will agree to repay the loan if you can’t. This can be a family member or friend. But remember, if you default on the loan, it will damage their credit too.
Get a secured loan
If you have bad credit, you may be able to get a secured loan. This is where you use something you own as collateral for the loan. For example, you could use your home or your car. However, if you default on the loan, the lender can take your property. So, this is not a good option unless you are sure you can make the payments.
Look for a no-credit-check loan.
Some lenders offer no-credit-check loans. But beware, these loans often have very high-interest rates and fees. They may also require collateral, like a car or home equity. So, this is not a good option unless you are sure you can make the payments.
Five tips on how to improve your credit score
Check your credit report for errors
An error on your credit report could be costing you points on your score. Use AnnualCreditReport.com to get your free annual credit reports from the three major credit bureaus. Review them carefully, and if you find an error, dispute it with the bureau using their online tools.
Make all of your payments on time.
Your payment history has the biggest impact on your score—accounting for 35{86b567321bb25cd749b61d53f86e9b99794e156fcea53d99e3c904814cea3e93} of its calculation. So making late payments can hurt your chances of qualifying for a car loan with bad credit. Instead, put yourself on autopay or set calendar reminders to ensure you make all future payments on time and in full.
Keep balances low on credit cards and other revolving credit
Carrying a high balance on your credit cards harms your credit utilization ratio—the second most important factor in your score (accounting for 30{86b567321bb25cd749b61d53f86e9b99794e156fcea53d99e3c904814cea3e93}). So if you have bad credit and want to improve your chances of getting a car loan, work on paying down your balances.
Get added as an authorized user.
If you’re having trouble qualifying for financing on your own, you may want to get added as an authorized user on someone else’s account—like a parent or spouse. This can help improve your score by adding positive history to your report. Make sure the account is in good standing before you agree to become an authorized user.
Use a secured credit card.
A secured credit card can help you build or rebuild your credit by requiring a security deposit, which becomes your credit limit. Of course, you’ll need to make regular monthly payments, and if you do, you’ll improve your score over time. Just be sure to avoid cards with high fees, which can offset any positive effects on your score.
If you have bad credit and want to finance a car, follow these tips to improve your chances of getting approved for an auto loan and get bad credit car finance. Following our advice, you can work on rebuilding your credit and get into the car you need—even with bad credit.