Emma Becker asked: People with bad credit face a lot of issues in getting a car loan. Even if they get it, the rate of interest is very high. People wonder if they can get a better deal in spite of their bad credit score. The fact is that you can have that luxury provided, you make a planned approach. Given below are some tips that would help you negotiate with the dealer:
o First of all, you must know your credit score. This is important because in some cases it has been observed that the dealer does not have an interest in your requirement. They often lie to finish the conversation.
o Now, if your credit score is below 600 but you have taken a car loan in the last 3 years, you stand a chance to get a good deal.
o If the numbers are below 550, you must try to improve the score by 50 points that is, around 600. Applying to several banks with a low score would only give you rejections. This would further decrease the score.
o In order to improve your FICO score, you should read the report carefully and check if there are any mistakes. Some times, talking to the lender and working out a mutual settlement also helps a lot.
o In case you are carrying 6 to 8 credit cards, select couple and surrender the rest. This would boost your credit ranking. You may also choose to go for debt consolidation.
o For a smooth approval of the application, the borrower must have an income of $ 1600 per month or above.
o Usually people who have a stable job, stand a better chance to get an auto loan at low interest rates, even if they have a bad credit score. The self employed people have a tough time, as compared to them.
o If you have just bought a home or shifted in to a new accommodation, do not apply for the auto loan. Wait for at least 6 months.
o Buying a second hand car costs less. This way you can get the loan rather easily.
o You may try applying for some monetary help under the 2009 Obama Stimulus Package. This is especially advisable for those who are buying their first car. This is also applicable for those who do not have a car for past three years or more.
o This package not only helps you with the loan. They also allow some grants. You do not need to pay back the grant money to the Federal Government. You may use this money to pay the first installment. In a regular practice one has to pay 10% of the cost as the first payment. When you have a bad credit history, paying little more towards the down payments can reduce the interest that you pay in the long run. So, you can try utilizing the amount to pay at least 20% as the first payment.
Neil
