Your credit score is the key to the approval of finances for your car. As soon as you apply for a loan, the lenders seek the credit score and assess the credit history and then they decide on the approval of the loan. However irregularity in payment, or outstanding debts might affect your credit score. A bad credit score does not necessarily mean that you cannot own a car. You need to research your chances of your obtaining the loan and also about different provisions and offers that are offered by the lenders. There are few steps that you can take to get the best offers on the loan amount.
Improve the credit score
If you are planning to apply for a car loan, then prior to that you can apply to any of the credit unions for a free copy of your credit report. The credit history will give an overview of your financial positions also your chances of obtaining the loan. In case you spot any inaccuracy or discrepancy, then you need to report the same at the earliest. This can help you to improve the credit score. An improved score can help you to get a comparative rate of interest. If you have any unused account, then do not close it as it shortens the duration of the credit history.
Determine the APR
You can also pay for the bills of the last six months though this will not have an effect on your credit history, but will reflect that you have started paying the lenders lately and might increase your chances of obtaining a loan. On contacting the lenders, you can speak to them about your credit score. Generally the lenders have the provision of providing different rate of interest for various brackets of credit scores. The loan officers can help you to determine the tire that you belong and the rate of interest that will be levied on your loan amount.
Seek for lenders
While applying for a loan, you can start with the financial institutes like banks and credit unions and then go for other lenders and dealers. Banks are known to provide favorable terms to borrowers with poor credit score. Few insurance companies also provide finances to borrowers with low credit score, so you can even apply with these lenders for loan. If you are not satisfied with the terms of the loan, you can shop around for a car loan.
Assess the loan term
The loan term is an important aspect that you cannot afford to miss. Often the borrowers tend to commit a mistake of considering only the monthly payment. A low monthly payment might lead to high loan amount through which you will end up in paying more. Prior to choosing the car make sure that you know the loan amount and your budget well. Well, this is owing to the reason that the with low credit score you might not be granted with a hefty amount of money. In case, you fail to get any loan, then you can think in the line of sell my car.
Go through the documentation
Documentation is an important aspect of any loan. It is important to go through the documents well and scrutinize whether you are charged with additional or extra charges like for extended warranties, color protection or the likewise. It is advisable to choose a financial institute like bank or credit union to finance your car rather than dealer financing, because dealers act as a middleman between the customers and the lenders. They often charge extra that leads the customers paying more for their cars. You can also compare the APR provided by different online lenders and also different packages or offers that are offered for the borrowers with poor credit score.
Author Bio: Carol Clement had a poor credit score, but still she could secure a car loan from banks. Here she has shared her experience while applying for a loan. She is now thinking to sell my car.