The anxiety of having to apply for a bad credit car loan is often so great, many refuse to finance a vehicle at all. There is a misguided perception among some credit challenged individuals that there is simply no chance of getting any kind of loan with a shaky credit history. To them, the only chance they might have of driving a nice car is if they happen to win big on their favorite game show someday. In all actuality, these are the people who are probably not only missing out on having reliable transportation; they are missing a good chance to get their shaky credit back on solid ground.
The fear of financing a car with bad credit generally stems from being unfamiliar with what actually makes a prospective borrower eligible for a car loan. Though one’s credit score and employment history play a big part, finance officers also take into account each individual’s personal situation as well. Getting laid off due to company downsizing is much different than someone who simply has a history of neglecting to pay his or her bills.
What else can ease the apprehension of financing a car with bad credit?
Knowing one’s credit score. Order a free annual credit report from the three major credit bureaus and make sure the information on record is correct.
Researching local lending rates. The APR for a bad credit car loan may be higher but it always helps to know what the averages are for one’s particular area.
Assessing a realistic down payment using an auto loan calculator. The bigger the down payment, the better; however, choose a car with a payment that comes to no more than 10-15% of one’s monthly income.
Shopping around for a lender. There is never any need to rush and jump in bed with the first lender that pops up.
Having a solid game plan and knowing what to expect ahead of time is key to overcoming a prospective borrower’s fear of rejection. It helps to provide a sense of confidence and objectivity, making one more likely to land a bad credit car loan with respectable terms.