Bad Credit Car Loans Near Lowell

 

Getting a loan for a new vehicle might seem impossible with bad credit, but there are definitely ways for potential buyers to get their hands on the transportation they need. More and more programs are available so that people with subpar credit ratings can get approved for loans; there are even lenders that focus solely on serving those with poor credit. If you have had a tough time securing a loan due to a low credit score, there are steps you can take that will increase your chances of getting approved. If your credit score falls within the poor category, don't despair, even if you have recent rejections.

Initial Steps

The first thing you'll need to do is get a copy of your credit report, preferably from all three national credit report services: Experian, Equifax, and TransUnion. First, it will show your overall FICO credit score, and you'll be able to see where you fall on the spectrum, which ranges from excellent to poor. Second, it will show the full history of your credit, with any credit cards or loans you've had or currently have, as well as any time you've been taken to collections for unpaid bills. Go through this information carefully with an eye out for inaccuracies. If you see something that you dispute, make an effort to straighten it out with proof in hand. If you're successful with that, the blemish can be removed from your credit report and your score will go up.

Also, make sure that you save enough for a decent down payment. Generally, the more you put down, the better your terms will be. Most of all, though, be realistic about what you can afford so that you can actually make your payments. Nothing will hurt your FICO score more than defaulting on a loan and having your car repossessed.

Getting a Car Loan with Poor Credit

If there's someone close to you with good credit who might want to help you out, you can ask them to cosign for you. Not everyone is willing to be a cosigner, though, since it puts them at risk, as they're entering a legally binding contract that makes them responsible for the payments if you default. The cosigner is essentially telling the lender that if you cannot pay at any point in the duration of the loan, they will. If you do get somebody to cosign, it will increase your chances of getting approved, perhaps at a lower interest rate than you could get on your own.

You can also approach a credit union, as they often have loan programs with more favorable terms and lower interest rates than banks. This is because they are owned by their depositors - the people who have accounts with them - as opposed to being owned by the shareholders, the way commercial banks are. That said, in most cases you must be a member of the credit union to borrow from it, and the conditions (and the ease of being admitted as a member) will vary from one credit union to the next.

What to Do Once You're Approved

If your request for a loan is approved, then your next order of business is to make sure you can keep up with the monthly payments. According to Experian, payments account for 35% of your FICO score (credit score), and if even one is missed it could cause your score to dip dramatically. If you make your payments on time, then your record will indicate that you're responsible and reliable, further improving your credit in the long run. All in all, having bad credit is not a deal-breaker. You may just have to work a bit harder to get what you need to be able to purchase a new vehicle.

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