Bad credit car and truck loans are very common as almost 25% of working U.S. citizens are credit-challenged. For those who have credit scores of 600 or below, you will usually have little or no problem getting the vehicle you have in mind, but you will just have to pay a higher interest rate for a while. A multitude of second chance auto loans are approved daily in the United States because lenders know that if you are working you need a car to get to work. When you fill out the application this is one of the major points the lenders check closely, to see how long you have been working at that particular job and what your current pay is.
Applying For A Bad Credit Loan
Prior to utilizing a bad credit vehicle loan there’s a few things you are capable of doing to ensure the procedure will go without problems for this specific specialized breed of vehicle finance.
Credit History Review
Industry experts all say you need to evaluate your credit report history at least once annually to ensure there aren’t any mistakes. This can be particularly critical if you’re seeking a bad credit vehicle loan. You can find a copy of your credit report history at Experian and if you feel you need it sign up for a one of their credit management products. You can also get a free copy of your credit report history at a great web site called annualcreditreport.com that will allow you to obtain a free copy once annually through each one of the three countrywide consumer credit reporting organizations. This has been mandated by Congress through legislation called the Fair and Accurate Credit Transactions Act (FACT Act).
Calculate What You Can Pay
You ought to have planned exactly how much you can conveniently pay for for your vehicle, with regard to both a one time down payment, then your monthly installments. Payments might have to continue for up to 6 years so you should have this in mind when you apply for the loan. A ten percent down payment is usually the number most lenders look at when financing. Most lenders have a vehicle loan calculator to help you crunch the numbers for your bad credit vehicle loan.
You will need to obtain proof of your employment and what you make weekly which a paystub will document with no problem. With paystub in hand you should have no problem with your loan. You may have to pay a higher interest rate on your loan at first, then after a year, with proper on time payments, you can refinance it to a lower rate and save yourself some extra bucks.
Clean Credit History
You’ll need to generate an effective effort to make your vehicle payments on time to maintain a clean credit history. Additionally, most car lenders reserve the right to repossess your vehicle should you become too delinquent on the payments. This is particularly true of buy here pay here car dealerships, which often employ GPS tracking to locate unpaid vehicles. Do not put yourself in a position where you might need immediate cash because you will want to avoid unscrupulous car title loan companies that might have you lose your vehicle because of unfair terms and conditions you might have to sign on to. It’s much easier to make payments on time for a year then refinance your loan so you can make smaller payments. You will have improved your credit score by this time so it should be feasible to put this saved money to better use.