You have a low credit score, but you need money to purchase a car. Perhaps the best solution in this case is to look for bad credit auto financing. Such deals are readily available, but it is easy to make the wrong choice. That is why you may want to get as much advice on bad credit auto loan shopping as possible.
Check your credit report before you start looking for a loan.
This is the best tip anyone can give you. If there are any errors in your report, such as loan repayments you have made not being entered, these might wrongfully lower your credit score. When you fix them, you will be able to get a higher credit score and a lower auto loan interest rate.
Shop around for bad credit auto financing.
You can easily get quotes online without this affecting your credit score. You should not hesitate to get as many free quotes as possible and compare them. This will not affect your credit score adversely. Only a great number of applications can do this.
Avoid getting a car loan from a car dealer.
This is important since car dealers usually bundle the borrowed sum for the car with the insurance and warranty cost. In this way, you get to borrow a larger sum of money, on which you will pay a high interest. Additionally, they add some percentages to the interest so that they make money from the deal too. This is definitely not a beneficial deal, right?
Consider getting a loan with a longer term.
This will not lower your interest. It may even make your loan more expensive as a whole. However, this can ease the financial burden on you, since you will be making smaller monthly repayments. This is a great benefit to have, if you are in a tough financial situation at present, but expect to get more income in the future.
Make a larger down payment.
It is true that you will have to use up some of your savings, but this will definitely bring you financial benefits. You will borrow a smaller sum and in this way you will reduce your cost of auto financing. A down payment of around 5% to 10% of the value of the vehicle can really make any loan much more affordable.
