Bad Credit Car Loans


The saying is true: Bad credit happens to good people. Many of us have occasional hard times in our lives, and some of those situations can mean ending up with a credit score that's lower than we wish. It takes time to build credit back up, and when you find yourself saddled with that when you're also in need of a new car, it can be a challenge to get approved for financing. You might even feel like you're the only person with that problem, but that's certainly far from the truth. Lots of folks have credit problems, and car dealerships and banks alike are aware of that fact. That's why there are loans structured especially for hard-to-finance buyers.

These bad credit car loans have different approval standards in order to qualify people who've been rejected for traditional financing. The difference may simply be a higher interest rate, but there can be other requirements, such as weekly payments instead of monthly, and setting up an automatic debit schedule. For most sufferers of bad credit, that's a minor thing when it means finally getting approved to buy the car that they need.


How to Get Started

The most important step is to find out what your credit score is. It changes all the time based on the total amount of credit you've been extended, the percentage of that credit amount you're using at the moment, and payments you're making (or not making). There are three major credit bureaus that report credit scores, and since they use slightly different criteria, your score will probably be different according to each one. Every person is entitled to a free credit report once per year from each of the three, so be sure to obtain those and check them for accuracy. If you see anything on a credit report that's not true, you must work with the creditor to prove that it's not accurate and then work with them to get it removed from the report. You can also check your score throughout the year (usually as a service through a credit card that you have) without seeing the full report.

Knowing your up-to-date credit score will give you a ballpark idea of which loans and financing programs you might qualify for. Scores are grouped into general ranges of Excellent, Very Good, Good, Fair, and Poor, and these ranges also vary across the bureaus. Lenders, too, will set their own limits as to who they're willing to work with. If you find that your score falls into the fair or poor range, don't give up. That's where these bad credit car loans come in to save the day.


Climbing Back Up from Bad Credit

Once you're approved for financing, you'll be on your way back up - as long as you make your payments and don't open more credit accounts elsewhere. That's because each on-time payment you make slowly but steadily brings your score up, as it reduces the percentage of overall credit you're using. Note that it's good to keep your existing credit lines open, as opposed to closing those accounts: you don't want to actually use the credit, though-just keep the lines open so that your total amount of available credit is higher.

You can do some other things to help yourself out of a bad credit situation. If you don't need a new vehicle right away, keep saving as much as you can toward the down payment so that you won't need to borrow as much. The less you're seeking to borrow, the easier it will be to get approved - and the sooner you can pay it off. You should also have a realistic budget and resist looking into a price range that's above your means. Sure, everyone wants the car with the extra bells and whistles, but that kind of luxury should wait until you're in a better financial situation. This is the time to be content with a dependable and economical car that will simply get you where you need to go.

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