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Posts Tagged ‘Poor Credit’

There are three kinds of people when it comes to credit scores. The first
group of people can tell you exactly what their credit score is because they
check it religiously. The second group of people has a vague idea of what their
credit score is, but they aren’t too worried because they generally pay their
bills on time and don’t exceed their credit limits. The third group of people
has no idea what their credit score is other than knowing it’s probably pretty
bad, and they feel it would simply be better to not know.

Eventually, people from all three groups walk into a car dealership with the
intent of purchasing a new car, and one of the first things the dealer will do
is pull a credit report. The dealer is looking to establish what sort of
interest rate will be available to each particular person, because a credit
score basically defines if a buyer is a good financial risk or a dangerous one.

A credit score is comprised of many factors, including past and present payment
histories, credit balances in relation to available credit, and the amount of
credit available. The reason why it is important to keep a high credit score is
because it is these people who are offered the best interest rates. The 0%
financing offers which are so widely publicized by dealerships are actually only
available to a minority of buyers whose credit is immaculate. Everyone else gets
offered a higher interest rate, and, for some with poor credit, these rates can
be up into the double digits.

This is why it is so important to not only know what your credit score is, but
to keep close tabs on your financial health. A couple of missed payments can
damage your credit score considerably and may wind up adding hundreds of dollars
in finance charges to a high interest car loan. Having a high credit score will
pay off when financing a new car.

If you’ve been told you have adverse credit due to bankruptcy and cannot take out the loan you wanted you may be wondering what on earth that means and what you can do now. Having adverse credit means you have a poor or negative credit rating which can affect your ability to get some loans or other finance. Being in a position where you have lost everything due to the bankruptcy is bad enough but there is a light at the end of the tunnel. If you search thoroughly you will be able to find lenders who will accept those with adverse credit due to bankruptcy.

The key is to be prepared. Your credit rating may lower the size of the loan you can have or limit the types of car finance you can get. Mostly this means you can only get secured car finance which means the company uses your property as a guarantee that you will pay back the loan. An unsecured car finance loan will be much more difficult to obtain than the secured loan if you have a bad credit history.

In these situations you have three main options to consider. The first is to accept a lower rate loan and purchase a used or lower model vehicle that you can afford with this amount. This will mean you don’t get the car you want straight away but it will help to bump up that adverse credit for future car finance.

The second option is to hunt online for a better deal. There are thousands of credit companies out there that specialise in getting people with adverse credit car finance or other loans. Don’t feel like you have to be bullied into a poor deal just because you have poor credit. Check out various different companies, what offers and deals they have and what loans they can offer.

The third option is to go for a no credit check loan. If you have an adverse credit rating then this could be the option for you. For this type of loan, no credit check is made on the individual applying. They base the loan amount you can borrow on your current ability to pay it back so all you will need is proof of income. If you have an unstable income then they will probably examine the lowest possible amount that you can achieve and base your loan on this amount, so this type of loan may not be suitable for the self employed. Be aware though that without a credit check you are likely to pay a higher rate of interest.

Don’t let your credit rating ruin your life; you can get car finance just like anyone else. Always ensure you look around for the best deals and offers, make sure you know what the company is all about. You should also ensure that you have chosen a loan that best suits you. Take a look at its benefits and downfalls and ensure that you know exactly what you’re getting into. Make sure you can afford your loan especially with secured car finance. You need to ensure that in the worst case scenario you will still be able to pay those monthly payments.

Financing a car can be your first step toward recovering from bad
credit. Working with a sub-prime lender, you can secure reasonable rates for
financing your next car purchase. Even though these lenders offer good
rates, you can improve your loan with the following three tips.

1. Improve Your Credit Score

While you can’t dramatically change your credit score overnight, it’s
still worthwhile to improve it. The slight difference in rates
translates in to savings of hundreds of dollars.

Start by making sure your financial information is accurate. Check out
your credit report to be sure everything is in proper order. You may
also want to spread out your short term debt across multiple accounts, so
no one card is maxed. Paying off your debt will also improve your
score.

To gain instant ‘prime’ rating status, find a co-signer willing to help
you reestablish credit. Based on their credit rating, you can qualify
for ‘A’ rated loans.

2. Select Better Loan Terms

The loan terms you select also affect your loan costs. For instance,
the shorter your loan period is, the lower your rates. Applying online
with a lender can also qualify you for discounts on fees or rates.

Buying from a dealership will also help you get lower rates, even if
you buy a used car. Lenders view cars purchased from a dealership as less
of a risk.

But if you want a lower car payment, extend your loan terms up to seven
years. You also have the option of refinancing your car loan if rates
or your credit improves.

3. The Down Payment Factor

Your down payment can greatly reduce your rates. Most lenders prefer
20% down for an average loan. While you can get 100% financing, it will
cost you in both rates and fees. For the lowest costing financing, plan
on a down payment of 50% or more.

To find the most favorable numbers for your car financing, take some
time to request loan quotes. You can play with the loan terms, amount,
and down payment size to understand how each will affect your monthly
payment. By comparing a number of different companies, you can find the
best possible deal.

Good rate are available for people with poor credit; you just have to
find them.

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