March 8, 2020

Top 5 tips for getting a bad credit car loan in 2017

Top 5 tips for getting a bad credit car loan in 2017

Some tips on how to get the best deal on a poor credit rating…

A less than perfect credit rating doesn’t mean you won’t be able to get a new set of wheels.

There are some simple things you can do to help you get the best possible loan and all with the least amount of fuss.

Be upfront about your rating

Before you go shopping for a new vehicle, contact different finance providers and explain your situation.

Gauge their response, if they seem positive about progressing further, or not, then this might save you a whole lot of trouble when it comes to the crunch.

You never know, you might be able to have the assistance of a finance company right through the whole car buying process.

Don’t apply for credit with multiple lenders

It might seem that the more applications you submit the better your chances, but this can actually work to further negatively impact your credit rating.

Try for a longer loan

Yes, you will end up paying more, however the lower monthly repayment costs might just make the difference between getting finance and not.

The finance provider will look at your current financial situation, including income and expenses, and decide exactly how much they feel you can comfortably repay.

Bill Tsouvalas, founder and managing director at Bad Credit Car Loans says extending the term of your loan can take a lot of pressure off.

“A lot of people initially opt for three year loans, especially when they are trying to improve their credit,”

“But a longer loan period can help you maintain your cashflow and enable you to show over a period of time that you aren’t actually a bad credit risk.”

Information is your best friend

Finance providers looking at potential borrowers who have poor or bad credit ratings are going to be even more thorough when it comes to checking out your financial situation and background.

Be sure to have documents like payslips, tax returns, bank statements and any other relevant financial documentation that can give the assessors the best picture of where you stand.

Business owners with poor credit

The documentation and information strategy is especially important for potential borrowers who are self-employed.

Be sure to provide recent invoices, business tax returns and copies of any contracts that the business holds with external clients.

Don’t borrow more than you need

The irony is that you need to borrow money to improve your credit score, so, take small steps first.

You might want that brand-new sports car, but maybe a small car is a more achievable goal? Or, try to find a demonstrator model – these can be thousands of dollars less than a regular new car.

Do you really need those optional extras? Keep it simple and as low-priced as possible and this will help you get back in the credit game.

Come to the table with a deposit

A decent deposit will help you a long way towards the finance you need on a new set of wheels.

That means, save! Put some money away each week over a couple of months and before you know it you have some equity to bring straight into the equation.

Having a deposit (and savings record) helps show the lender that you have the ability to cover repayments.

If it’s too good to be true…

We’ve all seen the signs promising ‘everyone approved’, but this could mean you’re signing up for extremely high interest rates and possibly large upfront commissions and fees.

A loan like this could possibly set you back again and further damage your credit rating.

Shop around and try and find a finance provider that wants to work with you to get the best possible outcome for both parties.

Get a guarantor

Having a close friend or family member act as guarantor may make you a more attractive prospect to lenders.

About Kate Richards 1263 Articles
Kate has always had an interest in writing and cars and now as a key member of the Behind the Wheel website team she gets to spend her days consumed by both.Aside from being a contributor and an editor at Behind the Wheel, Kate enjoys driving her Lancer EVO and walking her beloved dog, Max!

8 Comments on Top 5 tips for getting a bad credit car loan in 2017

  1. Be honest when talking to a finance provider. Lying about your current financial status will not help them help you. They are your best bet to get you out of your predicament, so be honest!

  2. I can definitely relate to this. I have poor credit rating so I really have a hard time getting a car loan. No one wants to be my guarantor though.

  3. I think most middle class people would prefer to ask for a loan then to buy a car outright. And yes, honesty is the best policy in everything you do so it never hurts to be truthful about your financial situation when asking for a loan.

  4. Thanks for the tips!, its really helpful and now I know more about making loans by reading this article. Getting a guarantor is pretty tough since they have to really trust you with the money.

  5. I feel that a hefty down payment can trump all barriers where it comes to car buying with bad credit. Many auto dealerships (especially buy here pay here lots) will work with a person who can show proof of steady income and a nice-sized down payment, regardless of your credit history.

  6. I heard that if you shopped multiple lenders like for house or car, if you shopped them all at one period of time (like all over a 30-day window or so) and they all made inquiries on your credit report then it wouldn’t impact your score as much because credit bureaus would recognize and understand that you’re shopping around. Is this not so?

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