Getting a loan approved is extremely easy nowadays because of the huge competition persisting among financial and lending institutions. However, the same does not apply in the case of people who have a low credit score and a bad credit history, and even if you manage to get a bad credit loan, you will have to pay very high interest rates and follow extremely strict terms and conditions. At the same time, you can still manage to get a reasonable auto loan approved by using a little common sense and acting wisely. Our tips here will help you in getting your auto loan approved in a jiffy even if you have a bad credit score.
Get your credit history: You are authorized by the government to get your free credit report from each of the three main credit bureaus. Get your credit report and check to see if there are any mistakes that can be corrected to improve your credit score. You can improve your credit score considerably by getting rid of redundant credit and grocery store cards. Just remember not to cancel your oldest credit card. Get your credit report updated and wait till your credit score improves before applying for an auto loan. If possible, clear all outstanding credit card bills before you apply for your car loan. Apart from influencing the approval or rejection of your loan application, your credit score will also determine the interest rates and the repayment terms that you get on your auto loan.
Save up for a down payment: The larger the amount of money that you are ready to put as down payment on your loan, the higher are your chances of getting your auto loan approved. Not just this, you will also be able to get a better rate of interest and a more flexible repayment plan by putting down a substantial percentage of your loan amount as down payment.
Don’t chuck your old job just yet: Credit companies prefer giving loans to people who have a steady job and income. So apply for a loan only after you have spent at least three months on a job. If you are thinking of picking up a new job somewhere, then apply for your loan before you leave your old job. The same case applies to you if you have just shifted to a new city; wait for at least three months before applying for an auto loan.
Shop around: The competition in the credit sector is growing day by day, and different companies are offering different deals in order to encourage people to borrow. You can easily save up to three to five per cent on interest rates simply by shopping around a little before taking your auto loan. You also get greater bargaining power if you manage to get competitive quotes from different companies. Your chances of getting a loan are higher if you deal with online financing companies, since these are the ones that generally offer the best deals. Get free quotes from a number of companies before finally deciding on which loan to go for.