With all of us owning large number of credit instruments at any given point of time, our chances of getting into bad credit situations are extremely high. Even the most careful loan payer might find himself in a bad credit situation with just a couple of missed payments. Unfortunately, getting out of a bad credit situation is much tougher than getting into one and improving an accidentally diminished credit score might take a lot of time. Getting into a bad credit situation can greatly hamper your borrowing activity, but unlike old times, when people who defaulted on loans could never get another one, a number of companies offer loans to people with bad credit. So if you want to get an auto loan approved for your new car but have a bad credit score, you can easily get it by following the steps below:
Get your credit history: The first thing that you need to do before you apply for any loan is to get your credit history from one of the three main credit bureaus. This would ensure that you know your exact credit score, are able to get any mistakes in your history corrected and are free from dealer and company scamsters who will tell you that your credit score is very low just to slam you with a high interest auto loan.
Negotiate the price of your car: There is absolutely no need to tell your car dealer that you need or will be applying for a bad credit auto loan. Remember that information is power, and please do not give it to your dealer. Approach like a normal customer and haggle as much as possible to get the best possible price for your car. Shop around to get the best deal and try to get rebates if possible. The lower the price of your car, the lower will be your loan amount and the higher will be your chances of getting and paying off a bad credit loan easily.
Approach a loan company: A large number of banks and credit institutions are involved in providing bad credit auto loans. Your monthly income and your credit history will pay a major role in determining your rate of interest, but you will find different companies offering you different deals –different APRs, different EMIs and different payment periods- for the same loan amount and credit score. You can find bad credit loans ranging from 12% APR to 20% APR for the same situation, so it is advised that you shop around for your loan in order to get the best deal possible. You will be able to find the best deals online, so don’t forget to apply for free quotes from online lending institutions. On the other hand, dealers will give you the highest interest rates and the toughest payment terms. Whichever loan you finally deign to take, keep two things in mind—one, always make sure that your monthly payment is low enough to be comfortably paid off by you every month for the whole payment period. Two, read the terms and conditions of your loan and understand them properly before you sign on the dotted line. Ignore the fine print and you can find yourself courting trouble sooner than later.