If you have bad or poor credit ratings and you need a car to fulfill your computation needs, chances are you might be confused as to how to go about it. You have a dire requirement for a car, but you just ca not manage to get one. In most cases, when an applicant applies for an auto loan, and knows he or she has poor credit ratings, there is a common feeling that things are not going to work out. Well, the good news is that that particular feeling is a misconception. Things are possible.
You can get your auto loan even with lousy credit ratings. The main reason why that is possible is because many subprime loan providers offer auto loans with bad credit. You can get your car loan, but you need to know a few facts about how the car market works, and you also need to organize and prepare yourself for your car loan. The article tries to help any individual with poor credit scores prepare for the credit facility by providing some of the necessary, and much required information that is related to acquiring loans with poor credit ratings or scores.
Credit scores to qualify for the car loan
Loan providers generally consider credit scores within the range of 500 to 680 while providing the car loans. The minimum score that is required is 500 to qualify for the loan. Creditors prefer not to entertain applicants whose credit ratings are below that level for the simple reason that the applicants automatically become subprime candidates, and the risk factor associated with the loan repayment increases. Loan providers always prefer to play it safe, especially in these troubled economic times when the market conditions are bad, and many individuals are facing pay cuts and job losses.
If you happen to have poor credit ratings, and desire to go in for standard auto dealers or creditors who provide auto loans, it is recommended you improve your credit ratings by engaging in a credit score recovery program. If you are pressed for time, and it is important to avail your car on a priority basis, it is advised you search out for creditors who specialize in providing credit facilities to people who have low FICO scores and bad or poor credit ratings. Many creditors provide poor credit car loans, and the best place to find them is to be online and search the net by Googling with the correct keywords.
Required monthly income
Generally loan providers look out for a monthly income that is within $2,000 to $2,500. The other factors considered are what kind of overheads or fixed monthly expenses the applicant incurs, in addition to other financial liabilities associated with maintaining the family. If your monthly paycheck is within the range, you are most likely to qualify for the auto loan. In case you are not, there is an option to go in for some additional income by taking up some part time job, or even take up some project work that helps in getting some extra money. In any event, you need to earn the required amount every month, and make sure there is proof regarding your total monthly income, which you can submit along with your loan application. In case you ca not come up with the required monthly pay, you can always find a car loan lender who can provide a bad credit auto loan.
Credit bureau and the length of your record
The reliability of a person is loan repayment is reflected in the credit records. If the credit history is short, it does not give much information about how the particular individual has repaid the credit borrowed. And this issue worries the creditors. They look out for consistency as far as loan repayment is concerned. And the only way they can come to know about it is through the credit records maintained with the credit bureaus.
Even if the credit record is not that good, if there is enough evidence that the applicant has eventually redeemed the loan, the creditor is likely to consider the loan application. However, if the applicant does not have a longish credit history, the creditor is going to be hesitant while considering the application. If you do not have the required credit history, it is recommended you contact a loan expert and work out other options as to how one can compensate for the deficiency of the credit records. One possible way is to go in for a co-applicant how has the required credit history, or maybe go in for a co-signer who can provide a guarantee on your behalf.
The down payment factor
The money you pay as a down payment makes a substantial difference. In fact; it is the major factor which decides the extent to which you will get your auto loan. The greater the amount, the better the chances you have of getting your required credit. Creditors understand if the person makes a bigger down payment, he or she is more committed in redeeming. Another advantage the creditor has is the fact that a substantial down payment reduces the net payable interest and the loan balance. The risk factor gets reduced. So if possible go in for a greater down payment to increase your chances of getting your loan, if you have poor credit ratings.
The rate of interest
Every loan, whether it is a car loan or a mortgage loan is associated with a certain rate of interest. The fundamental objective of the loan provider, any loan provider for that matter, is to make money through the interest rate. If you find it difficult to qualify, you could offer to pay a higher rate of interest for your car loan. It might interest the creditor, and tempt him or her in providing you with the loan.
People tend to hide their negative points. There is a general tendency to lie about things if one feels one can get away with it. The problem is as far as credit history or records are concerned, everything is recorded and in black and white. Your creditor will definitely know your credibility through the credit bureau. So if you lie while filing up the application form, it just would not work. it is very likely your application well get rejected on the grounds of misleading or false information. Providing wrong information intentionally can be a criminal offense in some of the states, and can even instigate a litigation or a law suit. So honesty is the best policy while applying.
Know the creditor
It is important to know about the creditor is background. At times, creditors have personal preferences as to who they desire to fund. One can check out the client history and get a certain idea as to what kind of clients the creditor favors, and which applicants are rejected. Generally there is a patter in the manner of rejections. If you feel you probably belong to the “rejection” category, it is advisable you find a different creditor who is likely to honor your application.
The car itself
The car that you choose plays a major part in deciding the parameters of the car loan. The down payment, the rate of interest, the tenure, etc depends upon the make and the model of the car you decide to buy. The lower the cost of the car, the greater the chances of getting your loan approval. it is worth thinking about a “used” car as a possible option if you do not have proper credit ratings.