If you are looking to get your first car or want to upgrade your old one, applying for a loan is the easiest route towards this goal. And your best chance of qualifying is to have a good credit history.
Still, you do not have to kiss your plans goodbye if you have bad credit. There are options available to you, like the bad credit car loans from Finance One.
How can you apply for these types of loans? What are your chances of getting approved? Follow these simple tips, and you will be bringing home a new car in no time.
Look for a Cosigner
Most lenders approve or decline an application based on the risk that it brings to the company. They look at a combination of factors, and the applicant’s credit score is a big part of it.
If you have bad credit and do not have enough time to improve it, getting a cosigner will help alleviate the risk and increase your chances of getting approved. It gives the lender the assurance that even if you miss some payments, someone else can make up for it.
Increase Your Down Payment
One way to increase your chances of getting approved for a car loan is to increase your down payment. It will reduce the loan amount that you have to apply for, which will work in your favour. It will also show the lender that you are very invested in the transaction and have no intentions of abandoning it in the future.
Check Out Second-Chance Car Loans
This type of loan is exactly what it sounds like – it offers second chances to people who encountered financial hardships and ended up with bad credit.
Lenders that offer this loan evaluate each application individually to come up with the best financial solution. They look at the applicant’s income and credit history to provide an option that is practically guaranteed for approval.
If you have tried a traditional car loan and failed, you should try second-chance loans like the bad credit card loans from Finance One.
Look for a Cheaper Vehicle
If everything else fails, shift your strategy a bit and look for a more affordable car. There is a good chance that you will be approved for a smaller loan amount if your application for a more expensive car is denied. This is true even if you have bad credit or no credit at all.
Improve Your Credit Score
If you do not qualify for a loan despite all your efforts, it might be best to take a step back and improve your credit first.
Payment history is very important, so you should consider paying off your bills. It could take 18 months before you can gain some headway, but in the end, it will be worth it. Not only will your application be approved, but you will get a more favourable rate.
Another way to raise your score is by reducing any existing debt as much as possible. Work on this until you hit a credit utilization ratio of no more than 30%.
Finally, you can take advantage of online tools that can help you increase your score straightaway by including monthly bills like utilities, phones, and streaming services.