8 Steps to Getting A Car Loan with Bad Credit

8 Steps to Getting A Car Loan with Bad Credit

 

Once you have bad credit, it’s extremely difficult to get out of that rut and start getting your financial stability back. A loan to purchase a new car can seem impossible to obtain; however, as long as you are dealing with trusted experts, you can still end up sitting behind the wheel of your perfect car, with a financing plan you can feel confident about. Our team at Eden Autos wants to see you succeed in your financial planning and drive away in a car that best fits your needs. We have more than 150 late model cars on our lot in Northeast Philly. Follow these eight steps to getting an auto loan with a low credit rating and you can start driving your perfect car before you know it..

1. Know What It Means to Have Bad Credit

A credit score below 630 is considered to be a poor credit score. In 2017, the average FICO credit score was 700. Bad credit (often referred to as Subprime Credit) limits your options in terms of who will give you loans, and what kinds of loans they will be. For borrowers with low credit scores It is also unlikely that you will qualify for a loan with an average or market interest rate. Interest rates will probably be higher and are usually longer-term loans. This can be extremely discouraging if auto loan payments are in your budget, but your credit score inhibits you from being able to get the loan in the first place. However, your options can be less limited than you may think.

2. Assess Your Loan and Application Options

There are auto dealers who are especially qualified to assist buyers with bad credit. Utilizing tools you may already have, such as a vehicle you can trade in, a larger down payment, or a co-signer, can help you qualify for better financing. Some subprime borrowers may see an interest rate as high as 16 percent, whereas borrowers with good credit will usually pay six percent or less. But if you know you have bad credit, knowing that your interest rate will be higher can help you budget and prepare for the cost of your new loan.

3. Find an Auto Dealer That Will Work with Bad Credit

Some dealerships will turn you away if you have bad credit. At Eden Autos, our team is trained to help our customers with low credit scores. We want to make sure you have options to finance your new vehicle, whether it’s for work or just to regain your independence for commuting and errands. Look for Buy Here Pay Here (BHPH) dealerships that offer financing options to bad credit buyers, and make sure you meet with the actual dealership experts who handle the subprime auto loans.

 

At Eden Autos, we pride ourselves on the quality of our BHPH program that allows customers who otherwise couldn’t obtain traditional bank financing to get into a new vehicle at an affordable monthly payment

4. Fill Out an Application to Be Pre-Approved

Walking into a dealership after getting pre-approved online speeds up the process of financing your new car. This saves you the time when you’re at the dealership and can let you know if you are qualified for a loan in just seconds. After getting pre-qualified for your loan, you can just focus on finding a car that’s a perfect match for you. In addition, getting your approval in advance will help you know what your new loan should look like regarding factors such as the loan term, monthly payment and interest rate. If you have questions about the results, you can call the dealership and speak with someone to get more information.

5. Establish A Price Range and Find A Car That Will Work for You

If you haven’t already factored the cost of your loan into your budget, now is the time to do so. Calculate how much income you have to put towards a loan payment and car insurance, if you don’t already have insurance or anticipate that your premium might go up. Using tools like an auto loan calculator will help you take a look at your monthly payments and help you understand where your money is going and the extra costs associated with taking out a loan.

6. Look at Online Inventories

In order to speed up the process of finding a car that fits your needs and budget, browse the online inventory to find a car before you even step on the dealership’s lot to look at cars. Online inventories for used car dealerships often include important specs such as the number of miles on the car and all the features. All of Eden’s vehicles also have a full CarStory report built in to compare pricing, mileage, wear and tear, and other details about the car’s condition you may not get from other dealers.

7. Consult the Financial Team

After doing your research and test driven a few vehicles that enables you to decide on your perfect car, it’s time to sit down with the dealership experts so they can help you seal the deal on your new car. Eden’s financial professionals will help ensure you understand everything about your financing and walk you through all the steps to buying your new car.

8. Improving Your Credit Score with Your New Loan

Now that you have your loan, making consistent payments on it is the way to make sure it’s a smooth ride from the beginning. Set alerts on your calendar for the upcoming payments to make sure you have allocated the funds and make your payments early to make sure you’re beating the due dates, not just meeting them. Use your new loan as an opportunity to improve your credit for future loans and credit. After you are approved for your new auto loan and are driving around in your new car, it’s a chance for you to start improving your finances for the future.

 

The professional staff at Eden Autos is committed to providing our customers with the very best hassle-free buying experience in the Delaware Valley. Every vehicle on our lot has undergone a comprehensive quality inspection, and comes with a 5-day Unconditional Money-Back Guarantee, a free Carfax Report and a Bumper-to-Bumper Warranty. We are conveniently located at 6213 E. Roosevelt Blvd. in Northeast Philadelphia.

 

 

5 Tips for Buying a Car with Bad Credit

5 Tips for Buying a Car with Bad Credit

 

Buying a car when you have bad credit isn’t always easy. Some lenders simply won’t give you the loan you need, even if you now have a good job and are on your way to repairing your credit score. High debt, late payments, and vehicle repossessions can make it difficult to buy a new, or even a used, car. Fortunately, there are a few things you can do to turn things around and get the vehicle of your dreams, or at least the car you need. Here are a few tips for buying a car when you have bad credit.

 

Make a Good-Size Down Payment

If you can make a good-size down payment, you may be able to overcome some of the issues associated with bad credit. Your credit score will be a factor in how much money you can borrow and what the interest rate will be. If you can’t get a loan for the amount you need, you may still be able to purchase the vehicle you want by paying the difference as your down payment. This can also help you in the long term since you will be borrowing less money. That means you won’t pay as much interest over the life of the loan.

 

Have a Budget

One of the things that can get you into trouble financially is not knowing what you can afford. Your damaged credit score may have come from over-extending yourself, taking on more loans than you could pay for. Before you go car shopping, sit down and look over your income, bills, and leftover money. Do you have enough to commit to a monthly car payment? If so, how much can you safely set aside without impacting your necessary expenses such as food, clothing, rent, and other things? Even if you really want a certain car, you need to be realistic and make sure you don’t spend too much. If you do, you may end up defaulting on yet another loan, damaging your credit even further.

 

Understand the “Two Weeks” Rule

Whenever you apply for a new line of credit, no matter what type it is, the lender makes an inquiry on your credit history. This shows them all your loans and your credit history. Whenever you do this, it temporarily lowers your credit score a little bit. It’s not a huge amount, but it can be the difference between getting a loan and being denied. However, when applied for an auto loan, generally the credit reporting companies see all credit inquiries done by auto loan lenders within two weeks as one inquiry. This means you only take that hit once as long as you don’t go beyond two weeks from the first inquiry.

 

This means you should do your best to do your car search in a reasonable time. You can take longer than two weeks to look at cars, but once you get serious and start applying for loans, do so within a couple of weeks.

 

Short-Term Loans Have Less Interest

In most cases, going for a three-year loan over a five-year loan does mean you’ll pay less overall in interest. Some lenders are also more likely to give short-term loans to those who have bad credit, especially if you have a down payment. While it does mean your monthly payment may be a little higher than it would if you had a longer loan period, it does mean you’ll pay off your car faster. That can be helpful if you’re trying to pay down other lines of credit. The sooner you pay off your car loan, the sooner you can devote that money to paying on other things.

 

Have a Co-Signer

While it may not be ideal, you may need to get a co-signer to get a loan if your credit is too bad. The co-signer is basically saying that they take responsibility for the loan if you can’t pay it. This is a major financial obligation to take on, and many people are very cautious about co-signing. If you ask someone to co-sign on your loan, you want to be certain you can make the payments. If you can’t, it will likely destroy any relationship you have with the co-signer.

 

These are just a few tips for buying a car when you have bad credit. Fortunately, once you do buy a car and make the payments on time, it will start to positively impact your credit rating. At Eden Autos, we have flexible financing solutions to meet the individual needs of all our customers, regardless of credit scores and history. No matter what your current financial situation, our dedicated staff will help you drive home in a quality pre-owned vehicle from our extensive inventory that is right for you, with affordable financing in place that’s within your budget.

 

 

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