Ten steps to getting a Car Loan on Bad Credit

Nobody can argue that a car can be an absolute necessity today with commutes to school and work. However if you have bad or no credit, it is almost impossible to get a loan. Ironically enough, by not having the option to get the loan you will not have the means of transportation in order to work off the bad credit or establish some good credit. Luckily, this does not have to be a death sentence because it is entirely possible for you to be getting a car loan with bad credit.

One of the first steps you should take in acquiring the needed car loan is to order your credit report from the major credit bureaus. Some examples of these bureaus include TransUnion, Equifax, and Experian. After you have received the credit reports you should compare any discrepancies between the reports. It is not unusual for credit reports to have small errors that can be fixed to raise the credit score by a small margin.

The second step is to optimize your credit. One of the ways you can do this is to make small payments and pay past-due amounts. After doing this for around six months you should see some returns in that your credit score should be moving in the positive direction.

The third step you should take is to set realistic expectations on the type of car loan you will have when applying with bad or no credit. Usually this entails having a high interest rate or to place a large down payment.

For the fourth step in your car loan seeking process, you should prepare for the future. This means making a budget of your current expenses and determining what kind of interest rate you can manage comfortably. In this stage of car loan hunt, you might want to also save some money for the down payment, because as mentioned earlier, the down payment might be quite large.

The fifth step should involve contacting your local bank or credit union. By contacting banks and unions that you have history with will increase your chances of having a more favorable loan.

On the sixth step you will need to review your car loan options. Most likely the car loans will have a high interest rate; however it may vary between the banks, credit unions, or car dealerships. A car loan might be more affordable if it asks for a co-signer, so be sure to have someone that will vouch for you.

The seventh step is to come up with a back-up plan. For example, if your options are not looking to hot, applying through a sub-prime lenders, a specialist for those who have damaged credit.

Shopping for an appropriate car that will suit your needs and your wallet is another important step. You want to find something that meets all of you needs and will be something you will be able to comfortably afford.

The ninth step will be to negotiate the sales price of the desired car. By bringing someone with you and paying close attention to avoid trap phrases such as promises of lower monthly payment over a long period of time, you should be able to negotiate an appropriate deal.

The tenth and last step will involve reviewing your options one last time and be sure it is something that you can make monthly payments on over a long period of time. If you make your monthly payments over time your credit can improve and when it is time for another loan you will be in a better position. Keeping this ten step process in mind should help you adjust to the problems of having bad or no credit.

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