5 Tips for Bad Credit Car Loan

5 Tips for Bad Credit Car Loan

by Ronn Jones

In recent times, owning a car has become more of a need than a luxury. It has become essential to have a car to maintain the daily rush in today's world. However, the expense involved with purchasing a car is not a very small one. It is true that several loan plans or finance schemes have been introduced to help individuals fulfill their need of purchase. But that does not solve the issue. As a loan history is often checked before the finance takes place. Especially it becomes even more difficult for an individual to get a loan for purchasing a car if he does not have a credit history and worse if he has a bad credit history.

However, this does not necessarily mean that a person with a bad credit will never be able to acquire a finance scheme to help him own a car. There are certain things that have to be kept in mind in order to get the bad credit car loan.

First of all, one should be well aware of his credit score before proceeding for the loan. It is obvious that without proper information on the credit score an individual will not be able to judge how to proceed. So it is better to free credit report from each of the major bureaus once a year.

One should be well aware of the interest rate and prepare a budget in advance. The interest rates for bad credit car loan often vary from 12% to 18%. An estimate of the loan interest rate and monthly net income would often drive the repayment. Hence this has to be carefully considered to understand the amount that could be borrowed. There are several auto loan calculators available. This program could be used to prepare an estimated budget. However, the results may vary. In case it does, it is better to review the loan materials like the auto loan amount; loan rate; the loan fees and the taxes and fees.

There are several credit unions available nowadays. These credit unions can be joined automatically by virtue of an individual's workplace, school etc. Sometimes these credit unions can also be joined by paying a small fee. As most of these credit unions operate as non-profits, they offer some of the most competitive rates available.

One very important thing would be to know how to work and negotiate with used car dealers. Used car dealers play an important role in bad credit car loan. While many of the larger lenders have consumer-direct lending groups, the vast majority of auto loans in the U.S. are originated through dealerships. These dealers often know lenders; they are experienced in preparing loan applications; they have cars for sale and most importantly they can provide alternatives. While negotiating with them, one should always be ready with the Finance and Insurance office.

And finally, last but not the least, it is always better to get loan quotes in advance. This would provide a lead time and also help to foresee and prepare well for the bad credit car loan.