Everyone with a bad credit score knows well that Murphy’s Law acts a major obstacle while buying a car. Everything that can go wrong will go wrong. And, the main reason behind it is the terrible credit score. Lenders will reject your loan application. And, if anyone offers you an auto loan, you will have to suffer with high interest rates. So, what should a bad credit car buyer do? Refrain from buying a car for his entire life? Are loan sharks the only resort for making a car purchase with bad credit?
Don’t despair; here’s something to help you out!
With the increase in online auto financing company, the competition among lenders has increased. It has led to easy availability of second chance auto loans. The loan program is ideal for car buyers with credit issues. So, if you are in bankruptcy, or you have a subprime credit score, do not worry. There are a few lenders out there, who can help you make a fast car purchase.
Second Chance Auto Loans: How to get one?
The number of lenders offering second chance auto loans has increased. But, if the lender doesn’t find you financially stable, your auto loan may get rejected. So, learn two important tips for getting the loan. It will help you to buy the car and improve your credit score as well. Get ready to seal the deal.
1. Focus on your Income: Tell the Truth
Most car buyers do not report their total income to the IRS. It may help you to save money on your tax. But, remember that if you do not report your income, it will not reflect in your yearly income statements. Lenders consider your income listed on W-2 form or they go for the tax returns to check it. So, even if your bank records show the additional income, lenders will not consider it for calculating your debt to income ratio. It can prove to be negative for you as low income and bad credit are the two things that lenders try to stay away from.
2. Curb your Expenses: Buy an Affordable Car
When you credit score is below prime, you need to be ready for high interest rates. Lenders will consider your loan application risky and demand high interest rates for it. But, high interest rates do not mean that you have to keep making huge monthly payments for the loan term. Choose an affordable car, preferably a used car, to lower the total cost. You can even think of buying a demo car or a discontinued car model to reduce the price. Remember that second chance auto loans can be your ticket to better interest rates if you make regular monthly payments. So, stay in budget and compromise on an affordable car.
When you are applying for a second chance auto loan, you need to focus on two things: 1) Your income and 2) Your expenses i.e. your car budget. By maximizing your income and presenting a clear picture of your financials, the lender will be able to understand your situation in a better way. Also, it will give you a perspective on choosing a car within your budget.
Take time in understanding your financial situation and make a practical choice. Remember second chance auto loans can buy you a car as well as pull you out of the abyss of bad credit score. So, next time, you seek an auto financing company for buying a car, work out the details to get the best deal.