When it comes to buying a car with less than perfect credit, you could be facing an uphill battle. Lenders tend to be wary of lending money to consumers with bad credit.
However, there are a few steps you can take in order to increase your approval odds when it comes to your auto loan.
Steps to Take
Finding an auto loan that meets your requirements is easier than you may think, but qualifying for it is another story.
If you want to increase your chances of approval, follow the steps below:
View Your Credit Score and Report
Credit scores and reports are a big deal to lenders, so they should be for you as well.
If you haven’t already, get a free copy of your credit score and credit report.
Look over and review any negative information and verify its accuracy. If you find an error, dispute it right away.
Most auto lenders will require an income of at least $1600 per month in order to qualify for an auto loan. This amount will include any and all social security and disability payments.
You can use multiple sources of income to help you qualify for an auto loan as well. However, most lenders will just look at what source provides you with the most income.
Employment and Residency
Lending is a risky business, and one way lenders combat the risk is by asking loan applicants for their employment and residency history.
Lenders want to see an applicant with at least 6 months at their current position and 3 years of consistent working history.
However, if your job is seasonal, the lender will consider your individual situation.
The down payment on your auto loan can play a role for some lenders. A larger down payment shows a lender that you are “invested” in the car and are taking on some risk.
If you have less than perfect credit, you may be required to place a 20% down payment. If you want to provide 20 percent down but do not have the funds, wait.
You can put your savings into an investment account and wait for the funds to reach maturity.
A bad credit score can make it much more difficult to find affordable financing. If you are looking to buy a new car but are in need of financing, CrediReady can help.
Our nationwide network of trusted dealers and verified lenders work with buyers in all credit situations. Take a moment to fill out our free no-obligation loan inquiry form and start shopping for your dream car today!