A low FICO credit score will make getting credit more difficult. However, applying for car loans with bad credit is not a bar to successful automobile financing. This includes buying a car after bankruptcy, provided that the applicant is in stable employment and can prove affordability.
Car Loans with Bad Credit
Poor credit auto financing is necessary when someone has failed to comply with the T&C’s of one or more credit agreements. This includes missed and late payments, those in debt relief programs and individuals who have filed for bankruptcy. These indiscretions will show on a credit report for up to 10 years.
FICO Credit Score
The rate of interest on a bad credit auto loan will depend heavily on the applicant’s FICO credit score. The severity of a credit transgression will determine how much a score falls by. The largest falls take place following bankruptcy, foreclosure, account delinquency.
Make Punctual Monthly Repayments
The longer the period that lapses between default and an application for credit, the higher a FICO credit score will be. This means that it is important to maintain timely repayments on other credit agreements, such as the mortgage.
Correct Credit Report Errors
Get hold of a free credit report and check this for any errors. Should there be any inaccuracies, it is imperative that these are corrected through the credit reference agency prior to applying for a poor credit car loan. Corrections can be arranged by the individual or a licensed attorney.
Affordability is critical to both the borrower and lender. Before applying for credit, perform a thorough budgetary analysis to determine how much can be contributed to poor credit auto financing each month. A low debt to income ratio is the key to acceptance.
Car Loan Lender
Rather than going directly to a dealership, use the services of a car loan lender. They will trawl the entire market for the most affordable deal. It also provides the borrower with an opportunity to explain why and how any poor credit arose. The service is far more personal and is vastly more likely to lead to approval.
Car loans with bad credit are achievable, provided that the borrower takes practical steps to ensure approval. Once a FICO credit score improves in a couple of years, be sure to refinance as more favorable deals will be available.
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional before proceeding.