Are you one of those people who are constantly working to improve their financial status and reach their ideal credit score goals to get a car for traveling better living? If yes – then don’t get confused. Getting a car with low credit score is possible now. The personalized recommendations provided below for all those who are aiming for a car, will definitely be helpful.
What is a credit score?
A credit score is a number calculated by the Fair Issac Corporation (FICO), using a formula that counts all your credit card history and payment routines. The calculated number is within the range of 300-850. Those with the score under 640 are considered poor scorers. The purpose of calculating this number is to see if a person is eligible to get loans or not. It essentially studies whether you are capable of repaying the loan. Many rental companies keep this score in strict consideration when loaning a car or providing other services. As it poses a risk to them if you are not able to pay off the loan in due time. A low credit score makes it very difficult to get a loan, as many lenders do not trust you and often reject your loan requests. However, auto sales are predominantly run through car financing as majority of people cannot pay for a car upfront. Due to this market gap business suffers a lot as there are many people who want to loan cars but have a low score. To save them this inevitable loss of business, they take risks of loaning cars to low scorers. But, there is something hard required on your end.
Here is what you can do to get a good loan:
- The first thing you must do is get your credit score calculated from a credible source. Don’t trust dealers as they might be trying to take an advantage of your unawareness. You can get a free credit report annually and can even pay a small amount to get it in-between. If you find out that have a bad credit score proceed with the following steps.
- Determine the reason behind opting for a car loan. If you are getting a car because of some emergency and have no other means of transport, then a car loan is a great option. However, if you are getting a car just for the sake of it then getting a car, while having a low credit score, that probably is not a good idea. If former situation is the case, then get a secured credit card and try to accumulate credit score. Wait for 6-8 months before getting a car loan. Meanwhile work to increase your credit score.
- Choose a pocket friendly car, do not opt for an expensive car. Even though dealers can get you an expensive luxury car but it will not be a suitable option for you. Remember you are buying a car as a necessity and not to drive around the town, gloating. Get a car that can cater your everyday needs wells. Consider that you’ll not only be paying the installments but also for the fuel and maintenance expenditure. Choosing a cheaper car is a more convenient car and a wiser decision.
- Choose the best financing option. Credit union is probably the best one. Credit union provides great loans as compared to the market. They even provide you reasonable loans for second hand cars. A credit union will most likely grant you the loan considering your image as a resident. They will see how stable you are and how frequently you switch jobs to see your consistency. This gives an indication of your sense of responsibility.
- Your loan plan should ideally follow the rule of the thumb. That is 20 % of it as down payment, monthly installment of a loan duration of four years plan and the monthly expenses of your car should not be more than 10% of your monthly income. This formula can help you get the easiest loan plan.
Shopping for the car:
- After getting your loan approved you can shop for a vehicle. Do not go for the first car you see. Do extensive research and surf the market. Go to different lenders and compare their package. Choose the one that fits your budget well. Don’t worry if you can’t find a good lender right away. Keep looking and you will surely find the one for you.
- If you’re buying a second hand car, then make sure you check the car’s history by using its VIN number. Also get the car thoroughly checked by a mechanic to make sure you are not getting fooled and the vehicle is just how you want it to be.
- Don’t be gullible, don’t fall for the sweet-talking car dealers into buying an expensive car which, for you, is of less value for the money exchanged. Do not fall victim to the “buy here, pay here” tactic. It will drain your pocket for a car not worth its price tag.
- Terms and conditions are often the most neglected part when making a deal. People simply skip through it regarding it as boring information. It is boring but not reading it can get you in deep trouble. Dealers take advantage of this human antic and may add some terms here and there that you won’t agree to. Always read the document from page to page and see if you agree to the terms and only then put the pen to the paper.
There you have it, a car of your own. You can wreck the wall between you and your desired car that is cemented with poor credit score by following all the instructions given above.