Looking to Purchase A New Vehicle With Bad Credit?
Before You Come Into The Dealership.
Most lenders who are offering to finance for subprime credit, typically have more requirements from the purchaser than most. It’s best to know what’s required before you even step foot into the dealership. Being prepared can save you both time and money.
Check Your Credit
The reality is that most American’s don’t understand, or in some cases, even know their credit score. With the growing number of mobile applications, there are many ways to check your credit. One of the great tools that a lot of people use is Credit Karma. This application is available on both iOS and Android devices. With a sleek interface and tools to help, you can be sure that this tool will help provide an understanding of your financial health. This tool is free to download! There are instances where people assume, they have bad credit. That may not necessarily be the case for you. Be sure to regularly check your credit score to ensure accurate information is being posted.
See If You Pre-Qualify
When shopping for a vehicle, most dealerships will want you to immediately fill out a credit application. For someone who is purchasing a vehicle with prime credit, and have found the vehicle they want, this isn’t an issue. However, when shopping for a vehicle with subprime credit, it’s best to know an estimation of your terms. In most cases, your personal bank may be the best options for approval. Your bank can see your income and spending habits. They may have much more flexibility with a financial relationship already being established. A pre-qualification tool will help you see if you qualify, and if you do, how much the lender will finance. Typically you will see a higher down-payment. The down-payment helps the lender mitigate a lot of the financial risk. Seeing if you pre-qualify is a great way to know your options before making a financial decision of any sort. Capital One’s Auto Navigator Tool is a great way to get a general idea of your options.
If you’re choosing a lender other than your bank, there may be more steps required to receive funding. Each lender has their own requirements. In most cases, you will be required to bring a few items with you. The items needed usually help provide a better scope of understanding to your situation. Your driver’s license will help the lender identify you. Most lenders who offer auto loans for bad credit will ask for proof of income. This may vary from lender to lender, but the average is 2 months of paystubs. This will help the lender understand your ability to support the costs associated with the loan. In addition, the lender may request proof of residency. A monthly bill and or lease agreement would suffice. All these documents will help ease the process of obtaining funding for bad credit.
Understanding Your Financing Rates
When you complete the full credit application the lender will provide you with an APR rate. This rate for financing with bad credit will typically exceed 15%. APR is the annual rate that you are charged for borrowing. This amount reflects the yearly costs associated with the loan rate. Your APR will be the percentage of the loan you will be responsible for paying on top of the original loan on a yearly basis. Be sure that when you are attempting to obtain financing, that you shop APR rates along with the vehicle. Lowering your APR will drop your monthly payments.
We hope you’ve enjoyed this article! Our goal is to educate our customers and future customers on the vehicle purchasing process.