Most people think its impossible, but its not. There are ways of getting approved for a poor credit car finance loan. This article will show you how: Add Up Your Current Debts The amount of money you pay each year toward debts shouldnt exceed 30% of your annual income. This includes your car payment. Before applying for an auto loan, add up the total amount you pay toward your debts each year, including the amount you plan to pay on your car. If this amount exceeds 30% of your annual income, youll need to take measures to lower your debt-to-income ratio. This means that youll either have to pay off some debts before applying for a car loan, or youll have to reduce the amount youll borrow. Clean Up Your Credit Before Applying Obtain copies of your credit reports from the three main reporting agencies. Check each report for errors or inaccuracies. Keep in mind that it takes these companies up to 30 days to follow through on disputes. Make timely payments on your other credit accounts in the months prior to applying. Even a few months of timely payments will improve your chances of approval. Finally, avoid applying for other forms of credit. Inquiries on your credit report temporarily lower your credit score. Make a Down Payment If you have bad credit, lenders are going to want to make sure that, even if you dont pay your loan, they can resale the car and get their money back. For this reason, its important that you take out a loan for less than the cars appraised amount. For example, if the car youre buying is worth $15,000, youll want to borrow less than that amount. Usually that means making a significant down payment. Making a down payment makes you less of a risk to a borrower, therefore improving your chances of being approved. |
