Getting a used car loan is not as difficult as you think, even if you have bad credit. It is good to know that lenders, credit unions and even banks offer used car loans to help facilitate the needs of people with bad credit. Be reminded that bad credit auto loans will usually come with a higher interest rate than normal auto loans. Having bad credit will qualify you as high risk when it comes to lenders and banks. The average used car loan rate may vary depending on location, and a 12 to 24% interest rate is to be expected. There are some factors worth considering before applying for a bad credit used car loan that will help you avail of the lowest interest rate available in the market.
It would be wise to choose a cheap, fuel efficient car that is easy to maintain. When in the state of bad credit, a large and thirsty SUV is not recommended because the fuel costs alone will leave a huge dent in your savings. Choose your new car wisely and think ahead when it comes to maintenance and overall value. You could always buy the car of your dreams when your finances improve, but in the meantime, a cheap compact is the ideal way to go.
Your credit rating will play a big part on the interest rate that lenders will impose on your used car auto loan. Obtain your credit report and study the figures indicated to determine any errors that may have occurred. An accurate credit report will facilitate easy approval on your car loan. Try to improve your credit history in advance by paying your bills or other debts on time before applying for a loan. Remember that minuscule changes in your credit report will have a huge impact on the interest rates that lenders may impose.
The amount of down payment that you are willing to pay will be a determining factor that will help you avail of low interest rates on your used car loan. This will also be reflected in your bank statement, as lenders will use this to assess your financial standing. An adequate down payment will also lessen the amount of monthly payments in your loan. Try to save more money three to six months in advance before deciding to buy a new car. The sacrifice will be worth it as lenders will see this as a good initiative on your part.
Take your time when shopping for a new car and try to look for sweet deals on the Internet before going to used car lots in your area. It would also be advisable to get a free quote from lenders online. A used car loan calculator could be utilized to get an idea on the average monthly payments that you'll have to make. Compare the quotes of several lenders before deciding to apply for a loan. This will help you determine the right kind of loan that you can afford.
