It is said that if you need a car, then you should take an auto loan. After all, with the growth of internet, a new breed of lenders has cropped up. So, it is believed that one can avail funds much more easily than before. To an extent, it is true. The process has become faster and much more convenient since you can look for potential lenders right from your desktop without having to run hither and thither. But it is a cruel world we live in, where people don’t like to help each other unless they have a personal agenda or have something to gain in the process.
If you come with a baggage of high risk, then getting auto financing will be a daunting task. Any lender, whether it is a conventional bank or a new-age merchant, will be hesitant to grant you any advance if your credit score is bad. If you don’t return them the money then they lose not just the interest (their personal profits) but also the principle which they offered to you. They can, of course, press legal actions against you but it would incur additional expenses and take up much time. So, no lender wants to provide bad credit auto loan unless he can be convinced or unless he is ready to take risks.
And those who do take the risk charge you an exorbitant amount of interest. So, you need to follow some expert advice before going for auto financing. Here are some key tips:
i. Try to improve your credit rating: If there’s no urgent need to buy a car, then you better postpone it by a few months and try improving your credit score in the meantime. Even a slight improvement would help you immensely and assist you in fetching low-cost loans. Thus, you will be required to make timely repayments to your whole repertoire of creditors for the next few weeks. It would soon reflect positively on your credit reports.
ii. Make personal checking: It is always good to take a look at your financial reports and check if the statements show the facts accurately. At times, there can be clerical errors which may have posed you in a negative light. In case, you can figure out any error, you can report it to the authorities and request for immediate rectification.
iii. Waiting: If you are genuinely suffering from low credit or have been bankrupt in recent months, then it is better to wait for some months rather than to avail immediate bad credit auto loan.
iv. Increase your down payment: If you are looking to buy a car immediately and cannot wait for long, then you can get friendlier auto financing if you show your willingness to go for higher down payment. That instills greater confidence in the lender’s mind and also cuts down his personal risk.
v. Getting a co-borrower on board: You can also arrange for another person (who has a good credit rating) to become your co-borrower or cosigner. His positive credit rating shall somewhat compensate for your negative one.