The ability to qualify for auto financing is something that just about everybody aspires to, but not everybody is able to achieve. The reason: bad credit.
You see, any FICO score under 600 is considered to be a poor credit score by the vast majority of auto financing lenders. And, what is even more challenging for poor-credit applicants is that most auto financing lenders consider the applicant’s credit score exclusively – but they often ignore other factors that could be relevant. They do not look at other factors that might otherwise indicate credit-worthiness, such as employment history or individual items on the applicant’s credit report.
If you have a poor credit score, you have no doubt experienced some challenges in getting approved for a loan. Here are 7 tips for finding special auto financing for bad credit individuals:
1. Find a car that is within your price range:
First, let’s get practical. You have a much better chance of qualifying for auto financing if you simply choose to purchase a car with a lower price tag. Yes, it would be great to get that all-frills-included, top-of-the-line model you have your eye on. But, with a poor credit score, beggars can’t be choosers, as they say. Do yourself a favor and select a lower-priced car now. In a couple of years, as you work to improve your credit score, you can always trade up to that better model.
2. Put together a sizable down payment in order to reduce your loan amount:
Another way to reduce the size of your loan – and increase your chances of getting special auto financing for bad credit individuals – is to come up with a larger down payment. This may not be possible for you, and that’s okay. But, if possible, scrape together more money for the down payment than the minimum required amount.
3. Run a credit check on yourself:
The bad credit auto financing lenders you are going apply to (see below) are going to run your credit score. That’s why it is a good idea to run a credit check on yourself first. By doing so, you can examine your report and look for anything that stands out – good or bad. Run your report with all three of the top agencies and become familiar with each one.
4. Approach one lender to get an idea of the rate you can qualify for:
The next strategic step to take is to establish a “baseline” quote by applying to just one new lender. Write down all of the details of the loan terms they offer you, including interest rate and repayment period (e.g., 60 months). You will request identical or better terms from the additional lenders to whom you apply.
5. Now, build a list of at least 5 bad credit auto financing lenders:
Your next step is to cast an even wider net by putting together a list of even more bad credit auto financing lenders. Your list should include at least 5 lenders. Search online.
6. Submit an auto financing application to each lender on your list:
Now, it is time to start submitting those applications. Apply to each and every lender on your list. Don’t get lazy and stop after you get your first offer or two (this will be tempting!). Instead, follow through to the end of the list.
7. Go back and negotiate for an even better offer:
Now, it is time to go back to those that made you a reasonable offer and negotiate for an even better one. Your chances of success will go up if you negotiate instead of just accepting what they offer you the first time around.