If you need a car but you have bad credit, it will be difficult, if not impossible, for you to get a traditional auto loan. Fortunately, you have some other options so you can get the car you want. Below is some more information about this so you can determine if this would be right for you.
Know Your Credit
When you apply for any kind of loan one of the first things a lender does is look at your credit report. For this reason, you should also look at your report. Fortunately, you can get your credit report from the three major credit bureaus: TransUnion, Equifax, and Experian. It is important that you get all three because one may not show the same information as another. This way you have a complete history of your credit. According to the Federal Trade Commission, you can get these reports completely free once every 12 months.
When you receive your credit report, you will notice four sections: your identifying information, all your credit history, inquiries into your credit, and public records. Look at all information to ensure everything is correct. You never know if a lender put something on the report that is not correct, such as a loan that you never applied for or the wrong loan amount. If you find any errors, you can dispute them. Your credit is very important as it will affect the interest rate you are offered, if you are approved for a loan.
Find the Right Lender
When you go to an auto dealership, they have lenders they use to determine if you are approved or not for a loan. The lenders they use may have high standards so there is a higher chance your loan will not be approved.
Many dealerships also use lenders that work with people that have bad credit. If they do not, you can find a lender on your own that will work with you. You could also get preapproved for a loan, if you prefer. This way you will not be disappointed if you find a car that you like and then get turned down for a loan.
When getting an auto loan with bad credit you will likely have a higher interest rate. This depends on the lender you choose so make sure you ask about this.
Take steps to improve your credit so next time you will not have a problem getting an auto loan.
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