How to Get Approved for a Car
Loan with a Bad Credit History |
By L. Sampson |
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Car loans are easier to get approved for than other, unsecured lines
of credit because they are secured by the car you purchase. So, even
with a bad credit history, it's possible to get approved for a car
loan. This article offers tips on getting approved for a car loan
with a bad credit history:
Make a Down Payment
If you have a bad credit history, lenders are going to want to make
sure that, even if you don't pay your loan, they can resale the car
and get their money back. For this reason, it's important that you
take out a loan for less than the cars appraised amount. For
example, if the car you're buying is worth $15,000, you'll want to
borrow less than that amount. Usually that means making a
significant down payment. Making a down payment makes you less of a
risk to a borrower, therefore improving your chances of being
approved.
Use Online Search Engines
If the only
place you search for a car loan is the car lot, then you're not
going to know whether the rates they're offering you are reasonable
or not. Dealerships are notorious for telling people that they
cannot get approved for a better loan because of their credit when,
in reality, this is not true. Even with a bad credit history, on a
secured loan you should be able to get a decent interest rate. Shop
online before going to the car lot and get an idea of what type of
loan you can get from other lenders.
Clean Up Your Credit
In the months before you apply for a car loan, make timely payment
on your other credit accounts. Even if you just have a few months of
timely payments prior to applying for an auto loan, it will look
much better than applying for a loan with recent negative reporting
from your other creditors. If you can prove that your bad credit
history is a thing of the past, a lender is much more likely to
approve your car loan. |
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