Friday, April 13, 2007

Car Loans For People With a Low Credit Score

Even if you have bad credit, chances are that you will be able to get an auto loan. Your loan may have a higher interest rate, because you are considered a higher risk applicant. Risk or no risk, you should still be able to get a loan. Today, due to the heavy competition in the loan industry, banks, credit unions and other finance companies are all making loans to people who may have less than perfect credit. There are some steps that you can take before you try to get an auto loan that could benefit your situation in the long run.

Check Your Credit Report

First, before you start shopping around for the best auto loan; make sure you get a copy of your credit report. Then check all the information and make sure that there are no inaccuracies. Next, compare rates. Interest rates on auto loans for people with poor credit run anywhere from ten percent to twenty percent. It is important to note that dealers offer financing through manufacturer’s finance companies, as well as deals with credit unions, banks, and other finance companies.

Talk to the Lender

When you are shopping around for a car loan, and you have poor credit, it is very important that you meet the banker/lender in person. Let the banker/lender know that yes, you had some rough patches in the past, which affected your credit. Give him some examples, such as a divorce or a temporary layoff. You will have more success if you talk with a lender and explain your situation, rather than just filling out your application.

Get Approved for Your Auto Loan Before You Start Shopping for Your Car

Finally, start applying for financing before you start shopping for your auto. Knowing what you can and can not afford will save you time, by narrowing your auto search down to those that fall into your budget range. There are auto loan choices for people with bad credit, just as there are auto choices.

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