A credit score is one of the widely used terms in the finance sector and when everyone says a good credit is essential, they simple mean it’s a privilege in many ways. But when you hear about bad credit score, what comes up in your mind?
Bad credit might sound quite harsh or a kind of failure, but it’s not the end of the world. That’s right! It simply doesn’t mean a dead-end and that there’s no way getting out of it. A score is usually considered bad if an individual has a history of delayed financial payments or debts in the past. So if someone planning to get a loan approved from the bank has a bad credit, then there are higher chances of getting rejected by the lender (bank).
It’s basically expressed as a range of numbers. For example, on the scale of 300 to 850, when you have a score that falls in the range of 300-500, it is reflected as a bad score. Sometimes even a credit score of 579 is considered as a bad credit in some cases, but that shouldn’t worry you because you still are eligible for a loan.
Getting a car loan for bad credit is a bit tricky process, but if you improve your credit score, your chances of loan approval become higher. Taking steps like regular EMI payments, setting up online payments, limiting credit card expenses, and not keeping unused credit card for longer timespan are just a few of the many ways to tackle bad credit score. Applicants for an auto loan should consider doing good amount of research to find out which banks are still willing to be a lender. Also, stay away from the subprime lenders who may promise to reduce your credit score by keeping your car as a collateral. But if things don’t fall into place, you can lose both your score and car at the same time. Thus subprime lenders are a big no-no!
Online Lending Network
Consider using an online lending network, as it’s easy to get loan quotes from various parts of the country. Instead of the multiple visits in different banks to attain car loan, try using online lending network. Firstly, the step involves filling out a form with all essential details so that you look genuine to the lender. Secondly, you can apply for the lenders of your choice here in just few minutes. You also have the chance of giving 5 more attempts in selecting the best provider only to find the right deal.
Limit your credit applications here to avoid the impact scores and consider making not too many hard inquiries.
The duration of a hard inquiry usually stays for 24 months, which is a long time to drop out of the credit history. Online networks like Auto Credit Express, myAutoloan.com and Car.Loan.com, are at the top and frequently used sites.
They are beneficial because of the following points:
- Affordable and are ok with bad credit.
- Easy pre-qualification form.
- Possibility of same day approval.
- Connections with more than 1000 auto buyers in case of used cars.
- Minimum of $1500/monthly income required (subject to change).
Second Chance Loan
A car loan obtained by second chance loan is where the loan providers are willingly to lend people with less or bad credit scores. Another way to get a positive feedback for the second chance loan is to make timely payments, thereby building a trustworthy history altogether.
The best way to repay this kind of loan is installment window that means payment done in bits, at regular intervals. It can be monthly, quarterly or can be extended from a year to six years. In some cases, you are required to make a down payment or minimum amount in comparison to the total amount of the car to be purchased.
Consider a cosigner with a good credit score for your car loan to increase the chances of approval. This also means that when you fail to repay the loan, there is a guaranty of your cosigner paying it.
With trust factor being high, the lender might offer you a lower interest rate, thus saving a good amount altogether. Also, both you and the cosigner need to repay the loan on time to avoid bad credit scores.
The above tips are some of the practical ones you should explore when looking for a car loan with less credit scores.