Subprime borrowers, or borrowers with less-than-ideal credit scores, often have a more difficult time getting financed for things like automobiles. If this sounds like you, do not get discouraged. Just because one bank won’t give you a car loan, does not necessarily mean another won’t.
In fact, many lenders nowadays are eager to work with subprime borrowers. If you are a subprime borrower that could use a little help, check out the following car loan tips.
Get a Copy of Your Credit Report
As a subprime borrower looking for a car loan, your first responsibility is getting a copy of your credit report. You can obtain a free copy online through several websites, which get your credit report from three main credit reporting bureaus. This will let you know exactly where your credit score stands before you begin applying for car loans. If it is a score that could use some improvement, you may wish to work at raising the number prior to the loan application process.
After getting a copy of your credit report, you should also take the opportunity to look it over and check for any inaccuracies. Inaccuracies are common on credit reports and can lead to loan denial and increased rates, so it is important to look over all the information in full. If you find anything that you believe is wrong, contact the appropriate credit bureau in writing to let them know of the error(s). They will then research the potential error and work at getting it fixed, if need be.
Do Not Rely on Dealerships for Financing
Many car dealerships advertise the ability to finance everyone, regardless of the type of credit they may have. Although this is often true, dealerships usually get a cut of all car loans that originate with them. Additionally, dealerships are able offer financing to subprime borrowers by raising interest rates and other fees.
This results in higher payments, which are undesirable to most buyers. It is best to contact lenders on your own, prior to visiting any car dealerships. If you have been approved for a car loan elsewhere, your loan rates will probably be considerably lower.
If you are a subprime borrower, it is extremely important to shop around before deciding on any car loan. This is because interest rates and loan terms can vary greatly from one lender to the next. You want to be sure you are getting the best possible deal for your current situation. If you are a bank or credit union member, it is a good idea to check with these places to see if you qualify for a car loan with them.
Since you currently do business with them, they may be more willing to offer you financing for a car. You can also shop around at various lenders online, as there are many to choose from. Do not settle on a loan unless you are comfortable with the terms and confident with your decision.
Keep Working to Improve Your Credit
Once you have been labeled a “subprime borrower,” it is up to you to keep working on improving your credit score. It can be done, but it takes hard work and dedication on your part. Be sure to make all of your monthly payments on time and do not take on more debt than you can afford. If you strive at improving your credit, the next car loan you get may have a significantly lower interest rate.
All of these car loan tips can be of great assistance to subprime borrowers. If you make the effort to do these things, you should be able to find a car loan that fits your needs.
This is a guest post from Sam Landon. Sam writes for CarInsurance.org.