Bad Credit Car Finance - 3 Tips
on Financing a Car with Poor |
By L. Sampson |
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Financing a car can be your first step toward recovering from bad
credit. Working with a sub-prime lender, you can secure reasonable
rates for financing your next car purchase. Even though these
lenders offer good rates, you can improve your loan with the
following three tips.
1. Improve Your Credit Score
While you can't dramatically change your credit score overnight,
it's still worthwhile to improve it. The slight difference in rates
translates in to savings of hundreds of dollars.
Start by
making sure your financial information is accurate. Check out your
credit report to be sure everything is in proper order. You may also
want to spread out your short term debt across multiple accounts, so
no one card is maxed. Paying off your debt will also improve your
score.
To gain instant 'prime' rating status, find a
co-signer willing to help you reestablish credit. Based on their
credit rating, you can qualify for 'A' rated loans.
2.
Select Better Loan Terms
The loan terms you select also
affect your loan costs. For instance, the shorter your loan period
is, the lower your rates. Applying online with a lender can also
qualify you for discounts on fees or rates.
Buying from a
dealership will also help you get lower rates, even if you buy a
used car. Lenders view cars purchased from a dealership as less of a
risk.
But if you want a lower car payment, extend your loan
terms up to seven years. You also have the option of refinancing
your car loan if rates or your credit improves.
3. The
Down Payment Factor
Your down payment can greatly reduce
your rates. Most lenders prefer 20% down for an average loan. While
you can get 100% financing, it will cost you in both rates and fees.
For the lowest costing financing, plan on a down payment of 50% or
more.
To find the most favorable numbers for your car
financing, take some time to request loan quotes. You can play with
the loan terms, amount, and down payment size to understand how each
will affect your monthly payment. By comparing a number of different
companies, you can find the best possible deal.
Good rate are
available for people with poor credit; you just have to find them. |
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