Bad credit: approved for vehicle loans
Do not assume that your bad credit will hold you back from getting a vehicle; you just need to know a few things first.
06:49 03 February 2014
Even if you have poor credit, you may be able to still finance the purchase of a vehicle. The secret to success is realizing that you will not be able to approach any dealer or lender with poor credit or no credit and walk out with the ideal solution. Here are a few things to keep in mind:
- If your credit is quite poor or you have no credit you will most likely want to search for lenders who specialise in offering suitable solutions. These companies will have options designed for those with poor credit unlike a lot of other dealers or lenders who only want to look for excellent credit candidates.
- Prepare yourself mentally for a little bit of disappointment. Even with companies that specialise in helping those with poor or no credit, you may still receive some rejections. Each lender has its own specific criteria. You should also remember that you will not get a very good interest rate with poor credit, but it is better than being refused entirely.
- Many loans are for multiple years, but that does not necessarily mean that you need to keep that particular loan. If you work to drastically improve your credit rating over a few years, you may be able to contact another lender and receive a better interest rate for the remaining time on your loan. Check with the current provider about penalties and fees if you pay off the loan early, or switch lenders.
- Whenever possible have an initial payment so that the risk to the lender is diminished. Sometimes it may be more sensible to save for an extended period of time and purchase a vehicle outright, especially if you are not able to receive or afford the payments with the type of interest rate that your credit rating produces for you.