What You Need To Know

Have you ever tried applying for an auto loan with a poor credit score? What was your experience like? What type of loan were you offered by the lender? What was the interest rate you had to pay? Was it expensive? Credit scores are most times overlooked by individuals. However, just like GPAs, they start to matter when such individuals apply for various loans – mortgage, auto, personal, and the rest.

As with any other loan, it can be challenging to get a good auto loan deal when your credit is in a bad shape. Most lenders often favour individuals with good credit scores, as they are deemed capable enough to pay off the loan. On the contrary, borrowers with bad credit are ignored or provided with loans that have high-interest rates. The reason for this is that lenders weigh their risks when it boils down to offering a loan. Hence, an individual with credit is deemed risky by the lender.

However, there are ways you can secure an auto loan even with not-so-perfect credit. There are lenders that provide loans for people with credit issues. The problem you may have to deal with is the high-interest rate that comes with such loan deals. Nonetheless, in this article, we have provided you with various options that would help you get an ideal auto loan.

What Is A Credit Score?

This is a three-digit number that determines the state of your credit. It works together with your credit report. A credit score ranges from 300 to 850. Your credit score falls within these five categories:

300 – 579 = Very Poor

580 – 669 = Fair

670 – 739 = Good

740 – 799 = Very Good

800 – 850 = Exceptional

Credit applicants in the category of “Very Poor” are most times required to make a deposit or pay a fee. Such applicants with this rating may have their loan applications denied by lenders. In the same vein, applicants with credit scores within 580 to 669 are considered by lenders to be subprime borrowers.

In the “Good” category, 8% of these applicants are regarded by lenders to be seriously delinquent later on. Applicants with credit scores between 740 and 799 are likely to get better loan deals with lower interest rates. Finally, those that sit at the very top with exceptional credit scores get the best deals from lenders.

How Can You Access An Auto Loan With Bad Credit?

One way that still remains efficient till date when it comes to getting an auto loan is building your credit. If you are not in dire need of a new vehicle, you can take your time to improve your credit. The benefits of having good credit extend beyond an auto loan. You can seek the help of a reputable credit repair company.

Another way to get an auto loan is to add a co-signer who has an excellent payment history. Having such a person improves the chances of your loan application being approved with a lower rate.

Once your loan has been approved, ensure that you make prompt payments every month. This would help you build a positive payment history and enhance your credit with time.

If you would like to know more or apply for an auto loan, please visit this link: getting bad credit auto loans.