Need A New Car? 3 Steps To Help You Obtain A Car Loan
Posted on: 13 March 2017
Buying a new car is never easy. However, if you have bad credit, the process can be downright stressful. If you're in the market, but you have less-than-perfect credit, don't despair. It's still possible for you to purchase a car. Here are three steps you should take to help increase your chances of being approved for a car loan.
Know Your Credit Report
If you haven't looked at your credit report in a while, it's time to take care of that. Not knowing your credit report can set you up for problems when you're trying to finance a car. Before you head out to the car dealerships, obtain a free copy of your credit report. Take the time to thoroughly research the report. Once you know what your credit report says, you'll be able to start fixing the problem areas.
Pay Off Debt
Whether you have collection accounts, or your just behind on a few payments, now's the time to take care of those problems. Before you apply for your auto loan, pay off as many of your debts as possible. If you're behind on payments, get caught up. Those repairs you make will increase your credit score, and improve your chances of being approved for a loan.
Dispute Errors
While you're looking at your credit report, pay close attention to possible errors. Look for accounts that don't belong to you, or accounts that are paid – but are showing as delinquent. Dispute those errors. Once they're removed from your report, your credit score will go up.
Increase Your Down Payment
If you've got bad credit, finance companies will probably require you to provide a down payment before they'll approve you for a loan. The more substantial the down payment you provide, the more likely it is that you'll be approved. Finance companies like to know that you have something substantial to lose if you fall behind on payments. If you can, increase the size of your down payment before you start looking at new cars.
Have a Contingency Plan
If you're in the market for a new car, you probably have a preference already picked out. Unfortunately, with bad credit, you might not qualify for your first choice of cars. That's why it's important for you to have a contingency plan. For instance, if a finance company won't approve you for a brand-new car, look for an older model of the car you've chosen. It's often easier to get approved for a used car.
A new car doesn't have to be out of the picture just because you have bad credit. Use the tips provided here to improve your chances of being approved for a car loan. For more help with obtaining financing, be sure to talk to a loan officer, such as at US Community Credit Union.
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