5 Tips for Getting a Car Loan with Bad Credit

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Co-Borrower or Co-Signer maybe needed for your auto loan to get approved.

Here are 5 simple tips for getting a car loan with bad credit or no credit.

 

 

 

5.  Be realistic about what type of vehicle you can afford.

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Be realistic about what vehicle you can afford and what a lender may be willing to finance you for.  Consider a used car rather than a new one.  And look for a little older model than a newer one vehicle.  Find some online finance or auto loan calculators that are useful for estimating affordability and possible monthly payments.

 

4.  Be ready to Pay a Down Payment.

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You need to be ready to pay a down payment, and the more money you have to put down the more you will benefit.  A down payment which can include cash but also any trade-in reduces the loan amount and lowers the risk for the lender.  A smaller loan amount will also reduce finance charges on that loan, saving the borrower money.

 

3.  A creditworthy Co-Borrower or Cosigner could also help.

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Co-borrowers on a joint loan are both responsible for the repayment of the loan and have equal rights to the vehicle.  A cosigner, on the other hand, agrees to make the loan payments if you fail to, and even pay off the whole loan, but has no rights to the use of the vehicle.  Both options spread the risk in the eyes of the lender.

 

2.  Check your credit reports for errors.

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Check your credit report for errors that might limit access to financing and not give you the best terms for your position.  You can get a free copy of your credit reports from each of the 3 major credit reporting agencies, Experian, Equifax, and Transunion, for free once a year.  Dispute any errors with the agencies if necessary and it never counts against you to pull your own credit.  It will not count as an extra inquiry which you do not normally want.

 

 1.  Apply for financing before you shop for a car.

Filling out an application early
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Apply for a loan before you shop for a car and compare any offers you receive to find the best deal.  Choose a suitable lender, such as _________, that accepts applications from people with all types of credit. Approved applicants can visit the dealership of their choice then knowing how much they have to spend on a car and then can negotiate its price with the confidence of a cash paying buyer.