Tips for Choosing Poor Credit Car Loan Options

If you have credit problems and a low credit score, you may have to look into bad credit car loans if you need a used vehicle. While poor credit can have several causes, it will likely impact your loan options. However, this does not mean you have to be locked into high interests or payments, and we would like to offer you a few tips for choosing loan terms if your credit isn’t all it could be.

 

Prepare to Be Flexible

 

While you might already have some idea about the kind of used car you want, it’s important to remember that poor credit might limit your choices. This means you might have to compromise with yourself and realize that you need to go with what’s affordable instead of the make and model you’ve always wanted. You can always work to repair your credit and indulge yourself when you have more credit options in the future.

 

Ask Questions

 

When you seek out bad credit car loans, ask your local dealerships about the kind of loans they can offer you and what might help you qualify. For example, if you have a new job or a limited work history, this might limit you at some dealerships, while others might be willing to consider your spouse’s income and offer you a joint loan. When you are aware of your loan options, it may be easier for you to make the best choice.

 

Know Your Credit Score

 

Even if you know you have a low credit score, it’s a good idea to find out exactly what it is before you start shopping around for loan options. Even having a fair score can open more doors when it comes to getting slightly lower interest rates than you might if your credit score is very low. Either way, it’s always best to know.

 

A low credit score can limit your options when it comes to buying a used car. However, when you understand how to find the best bad credit car loans available, you can make the most informed choice possible.

Are You Ready for an Auto Loan?

Purchasing a new car is probably one of the biggest commitments a person can make in their life, and is right up there with choosing a college, buying a house and the decisions to get married and have children. That said, before you go shopping for car loans, you need to really ask yourself: are you ready? Be honest, because once you secure that loan and drive your new vehicle off the lot, you’re stuck with both. Which is not necessarily a bad thing…unless you can no longer afford to pay. To make sure that you’re really ready for such a commitment, answer the following questions:

 

Do You Have a Steady Stream of Income?

 

A “steady stream of income” is not your part time job, your college job or your “I’m still figuring things out” job. A steady stream of income refers to income from the position you plan to hold for a while. It may not be your dream job, but it’s the job that will get you to your dream job.

 

Do You Have Other Debts?

 

You may not own a home or have any major school loans, but what kind of other debt do you have? If you have credit card debt, how great is it? Are all of your cards maxed out, or do you just use one or two at a time to pay for essentials like groceries and gas? Do you have outstanding tax debt, child support or alimony payments? If you have a lot of debt, you may want to whittle that down before taking on more.

 

Do You Have a Savings?

 

You may have a steady stream of income and hardly any debt, but neither will keep you comfortable in times of financial hardship. Do you have a nest egg to protect your investments when times get lean? Will you be able to cover the cost of repairs and insurance on top of a monthly car payment? If not, consider building your savings before investing in a brand-new vehicle.

 

The decision to buy a new car is a huge one. Before you start shopping for auto loans, make absolutely sure that you’re ready.