While it may seem the bottom has sank as you hear the echoing news from the bank in which you applied for an auto loan that you have been denied due to your credit score- it is not a total loss. When you are denied by the bank it is due to the fact that your credit rating has placed you in sub-prime territory. Although this may sound like a sinking ship- which at the present moment it is, it does not mean that you are forever branded to this category. Nor does this mean that your borrowing days have come to an end, either.
It is still possible to obtain a loan through a different lender, however there are a few things that you must understand. You have currently been rated as a sub-prime borrower. This means someone with bad credit. This is usually a result of a credit score that is less that 620. Now, it is time to take a deep breath and realize that your dream auto is still not out of reach…but, before you do make a decision to continue, be responsible. Are you really in a situation that you can afford to take on another debt? If you decide to continue, as this is just a “temporary” condition, then you will discover that there are many credit grantor’s who specialize in sub prime lending that are waiting to loan bad credit borrowers- like yourself, money. However, do not expect the same perks as if you were to obtain a loan out of the sub prime category. You will be paying a much higher interest rate.
So, what are your best options to get the most reasonably priced auto loan? The following are a few tips that will help you get on the right track:
- Get a copy of your credit report. Look it over to assure that everything is accurate and there are no errors. If there is inaccurate material on your report then address it immediately by contacting the credit bureau in writing. List your contact information and the error which you discovered.
- Do not rely on the dealer for finding the loan agent. This only increases the cost of the loan. The best situation is to secure your auto loan before purchasing your auto. You can get approved online for a car loan here.
- Shop around to get the best rates. Rates vary and it is necessary to compare what is available to you. Make sure you discuss an auto loan with your bank as well. Credit unions if you are a member to one are also a great resource for auto loans.
- Begin to work on correcting your credit score. Start paying down the bad debt. While it may seem like an ever ending battle it is doable, and your best option when it comes to securing a better adjusted loan.
Have you had an experience with getting a bad credit car loan? Let us know in the comments below.