Getting an auto loan with a less than ideal credit score is hard, but not impossible. There are a multitude of special programs from lenders that are designed for people with low credit to buy a car. Besides just your credit, there are many mistakes that you can make when going through the process of getting a bad credit auto loan.
If all goes well, a subprime auto loan is a great stepping stone towards building good credit. However, it is important to be aware that there are certain mistakes you can make which can lower your credit score even more. We’ve compiled a list of common mistakes consumers make:
You should never provide any false information at any point during your application process, especially relating to your income. Be aware that bad credit auto lenders are well aware many consumers do this in order to get a more affordable loan, however, the lenders are also vigilant and will search far and wide to ensure that the information you provided to them is accurate.
Typically, the lender will ask for a list of references and will also ask for you to bring in specific documents that will provide them an insight as to your financial situation.
Not knowing your credit score and reports
Do not even start searching for a car loan unless you have done a full examination of your credit score and credit report first. If you go to a car dealer without any knowledge of your credit score, some dealers may take advantage of you and give you a high-interest loan.
Be sure to get copies of all 3 of your credit scores and reports. Remember, you are authorized to receive your credit score and report from all 3 credit bureaus for free once per year from the government mandated website AnnualCreditReport.com. Again, this is a free government service, so use it as much as you can!
If you think that taking out a long-term loan will help you by lowering your month to month payments, it won’t at all. Understand that although you may have longer to pay off the loan, the interest rates on the loan will cost you more over the course of the loan than if it were a short-term loan.
If you are looking at possibly getting a long-term loan for a car to afford it, then you probably shouldn’t buy it. Remember, the goal here is to buy a car that can get you from point A to point B while helping you build your credit.
If you are certain you need a new car, be sure to do your research on the vehicle wisely. Some vehicles are much less reliable than others and will cost you thousands of dollars out of pocket for basic repairs and maintenance, especially if the car is outside the warranty period.
If you are in need of an auto loan and are unable to find a loan due to your score, CrediReady can help! Complete our fast, free, and secure application today and we will connect you to our database of dealers and lenders all over the country that can get you in a car that fits your needs