Buy A Car With Bad Credit - 4 Tips On Getting Approved
Below is a MRR and PLR article in category Finance -> subcategory Credit.
How to Buy a Car with Bad Credit: 4 Tips for Getting Approved
Overview
Financing a new or used car with poor credit is possible. By following a few strategic approaches, you can improve your chances of approval and potentially secure a better interest rate. While individuals with good credit have more options, those with bad credit need to be more diligent to find a good deal. Here are four tips to help you obtain a car loan despite having bad credit.
1. Know Your FICO Score
FICO scores range from 300 to 850. A lower score typically results in a higher interest rate on an auto loan. That said, having a low credit score doesn’t mean you can’t get a car loan, but it will affect the interest rate you receive.
Before applying for an auto loan, get a copy of your credit report and FICO score online. If your score is below 600, consider postponing your car purchase and spend six months working on improving your score.
2. Maintain Steady Employment
Auto loan lenders not only look at your credit score but also require proof of steady employment. Typically, applicants need to earn at least $1,200 a month and have been with the same employer for at least 90 days. To avoid any issues, it's best not to change jobs frequently. Lenders may ask for recent paycheck stubs as proof of employment.
3. Get Pre-Approved with a Subprime Auto Lender
Before you start shopping for a car, try to get pre-approved with an online subprime lender. These lenders specialize in helping those with bad credit secure financing. Although subprime loans typically have higher interest rates, you can refinance later for a better rate.
4. Apply with a Co-Borrower
One of the simplest ways to secure an auto loan with bad credit is by applying with a co-borrower. If your co-signer has excellent credit, it could help you secure a better interest rate. Be mindful, however, that if you’re unable to make payments, your co-borrower will be responsible for the loan.
Conclusion
Buying a car with bad credit may require extra effort, but by following these tips, you can improve your chances of securing an auto loan with favorable terms.
You can find the original non-AI version of this article here: Buy A Car With Bad Credit - 4 Tips On Getting Approved.
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