finding a vehicle for a growing family

Auto loan lenders, just like other financial institutions, prefer applicants with strong credit scores. A strong credit score shows financial responsibility and lowers your risk to the financier. However, you can still get a car loan with bad credit. Below are some tips that can help.

Improve Your Credit

Just because you have low credit doesn't mean that you cannot improve it. Sure, you might not reach a stellar score, but even a small improvement in your credit score can help. Here are some tips to improve your credit:

• Get rid of errors in your credit report
• Don't default on any payment
• Catch up on all defaults
• Limit your credit applications

Note that credit improvement takes time. Start as early as possible to enjoy the benefits when you are ready for your car's purchase.

Avail a Substantial Down Payment

You can buy a car on loan without a down payment, but you need a down payment if you have a bad credit score. In fact, the higher the down payment, the stronger your credit application is.

A substantial down payment strengthens your application in two main ways. First, the down payment signifies to the financier your seriousness for the purchase and your willingness to bear some of the purchase's risk. Secondly, the down payment reduces the loan amount and the risk exposure to the financier.

Shop Around

Another tip is to shop around as much as possible. Shopping with different lenders helps in two main ways.

First, lenders use slightly different criteria to evaluate credit scores and loan applications. Different lenders place different emphases on different factors. For example, some lenders will consider someone with a mid 600 score as too much of a risk, while others may consider offering a loan to someone with that score. Shop around to boost your chances of loan qualification.

Secondly, lenders use credit scores, plus other factors, to determine interest rates. Shop around to see the interest rates you qualify for. That way, you can use the interest rates as one of the factors when comparing loan offers if you qualify for multiple loans.

Strengthen Your Application in Other Areas

A credit score is just one of the factors lenders consider when evaluating loan applications and interest rates. Additional factors include your repayment history, income regularity, employment type, and amount of debt. Improve those additional factors to strengthen your overall credit appeal.

As you can see, a bad credit score is not a barrier to car ownership.

Contact a lender to learn more about bad credit car financing.