7 STEPS FOR OBTAINING AUTOMOBILE FINANCING WITH SUBOPTIMAL CREDIT

Having a low credit score can make the process of purchasing an automobile difficult. Banks often raise interest rates for subprime buyers, as they represent a greater risk to the lender. Nonetheless, it is crucial to contact a bank or loan provider to investigate the options available to finance the vehicle instead of immediately accepting a high-interest rate. Here are seven steps to obtaining a reasonable auto loan:

1. Are you in need of a vehicle?

Look at your current circumstances to identify if you have any other options, such as keeping your current vehicle, using a ridesharing company, or relying on public transport for six months to a year while striving to improve your credit score.

My advice for those who are not in a rush to get a car is to get a secured card and practice being responsible with it for an extended period, preferably a year, but at least six months.

According to Experian (one of the top 3 credit scoring agencies), expect to deal with a high-interest loan when you have bad credit and want to purchase a car. However, if your credit score is already good due to your past payment history (which makes up 35% of your credit score), start making your payments on time starting today. A few months of paying your bills on time should raise your credit score. Even waiting a month or two could be beneficial, as it could get you a high enough credit score to make a difference in interest rates.

2. What was the most recent occasion when you looked at your credit rating?

Refrain from accepting your credit score. Understand the details of your score, the activities that have affected it, and if there is any suspicious activity. You can review it for free once a year. Bring a copy of your credit report when you visit the dealership.

Car dealerships are eager to get you into a car and will go the extra mile to assist you. By and large, they have many professional relationships with people that can work with you, depending on the cause of their low credit rating.

3. Comparison shop

What you might consider a "bad credit" score may not be viewed the same way by your lender, and the rates vary between different financial institutions. Only assume that your credit is terrible after checking first. You can still get a car loan even with a low credit score. Recently, I sold a brand new Chevrolet Trax to a young woman who was sure her credit was awful, but it was pretty high.

4. Restrict your search to within two weeks

It is ironic that when trying to get a loan, lenders will take a look at your credit score. Unfortunately, every check of your credit report inflicts damage on it. The silver lining is that credit scoring models usually count all credit questions made by an auto loan lender within two to three weeks as only one inquiry. Therefore, it is essential to apply for auto loans only when you are ready to get one.

5. Choose the loan duration that is the least lengthy

Be mindful of the interest rate. Generally, loans for shorter periods will have lower interest rates, meaning you will pay less for your car. However, you must consider whether you can make the payments on time each month, and extending the loan can make it more manageable. Additionally, it might be helpful to analyze your budget and cut back unnecessary expenses to make a slightly higher payment possible.

6. Investigate newer cars before opting for older ones

People with a complicated credit history may assume an older car is the most affordable option. However, the reality is that they will face higher interest rates when buying an older vehicle. Thus, purchasing a new car with bad credit is often better. It's best to look at new cars first and then newer used cars since those are the cars that will provide the most attractive financing. Doing this can avoid vehicle loans requiring an additional $100 - $125 monthly repairs.

Before settling on a purchase, it is worth looking into all available options, especially if you are considering an older used car. You can locate a pre-owned vehicle that fits your budget and can be bought outright, thus avoiding financing.

7. Think about having someone co-sign

If you have an unfavorable credit score, finding a co-signer may be the most favorable way to get a car loan with a reasonable interest rate. If any of the following apply to you, it is worth considering this option:

• Your earnings are below the least needed to be eligible for an auto loan.
• Your credit rating is below 600, which is not ideal
• Your debt is too great to be approved for a loan compared to your income.

Suppose you are confident of your ability to make all payments due on your loan. In that case, you may enlist a co-signers help, allowing you to raise your credit score, but it is essential to remember that the co-signer would be accountable for payments if you cannot make them.

Finding a knowledgeable, professional salesperson you can trust is essential when purchasing. It is beneficial to work with someone reliable and supportive.

Give me a call today let's have a 10-minute conversation about what's best for you currently; you can call or text 690-865-8811 or contact me directly at the dealership at 716-932-4793.

—Certified Chevrolet Sales Consultant at West Herr Chevrolet Williamsville. Opinions Are My Own

8040 Transit Road Williamsville, NY 14221