If you have poor credit scores, it can affect your ability to borrow all kinds of essential items including a home mortgage, credit cards and even your next auto. Poor credit scores may signify your inability to repay a loan to a finance company, and it makes you appear to be a greater credit risk. Even with this obstacle, if you are in the market for a new car, you may be able to obtain a car finance loan even with problem credit scores.
Determine Your Credit Score
Assessing your credit circumstance is an important initial step. Experts suggest you order a copy of your credit score report from every of the three major credit report score bureaus: TransUnion, Equifax and Experian. Review your credit scores to see where you stand. Generally, anything over 700 is considered great credit score eligible for the best finance terms. If your score is under 500, you can need to spend some time correcting your credit report score before a bank will lend to you. If you notice any inaccuracies on your credit score report that may be dragging your scores down, send a certified letter to each of the reporting bureaus to request correction. Request an updated report reflecting the corrections.
Poor Credit Score Loans
Even if you do have poor credit, many financial institutions and automotive finance companies specialize in loans for consumers with damaged or less than perfect credit scores. Some online companies specialize in connecting consumers with finance companies that offer financing for both used and new cars even if you have had a history of late payments, judgments, liens and even bankruptcy. You may also be able to take out a loan even with less than perfect credit from your local credit union. You must be aware that you will in all probability be required to pay a higher interest rate on the loan due to your poor credit scores. Some lenders may also charge added fees on the loan to help cover their costs in case you default. Many consumers with poor credit are looking online for their car finance needs. With an online lender, you are more likely to receive a favorable interest rate on your car loan and have fewer requirements.
Refinance Your Car Loan
Once you are able to get a car loan, even if you pay a high interest rate, you may be eligible to refinance car loan down the road and dramatically lower your monthly payments. Make sure you make all of your payments on time for at least six to 12 months. After you have established a solid history of payments, you may apply for a car refinance loan. A refinance will assist you in reducing your monthly payment by lowering your interest rate or shortening the term you are paying. A car refinance will also allow you to build equity in your car loan faster helping you pay the car loan off quicker.
You can find more information about car loans and car refinancing online at OpenRoad Lending. There you will find useful tips on negotiating with the dealer and a helpful auto finance calculator to support find out the monthly payments.
About the Author: Chris Goodman has been in the auto finance business for more than 20 years and has assisted thousands of consumers with their car loan needs. He is an expert on car loans and assisting consumer with car refinancing. Find more information at online at OpenRoadLending.com and see how easy it is to get your next car loan.