I found the perfect new car, but my credit score isn’t great. Can I still finance my new vehicle with bad credit?
That’s a great question. Often times, a bad credit score feels like an insurmountable obstacle standing in between you and a big investment, like a new car, but we have good news. There are plenty of things you can do to finance a new car even with bad credit. Read on to check out some tips for getting approved even with less than perfect credit, and don’t put off your new car dreams another day!
Go to the right place:
The best place for someone with bad credit to seek a loan might not be a commercial bank. Instead, try a credit union. Credit unions are local, nonprofit institutions and are owned by their members. Not only does this lead to generally lower fees and borrowing costs, but also credit unions are generally more willing to approve an applicant with bad credit, because they don’t have the pressure that commercial banks experience to create profits for shareholders.
If you have a valid explanation, offer it:
Sometimes, there are genuinely valid explanations for having a bad credit score. Maybe you or a family member suffered an unexpected medical emergency, or a storm caused major damage to your home and you needed to make expensive repairs. You can attach a 100-word statement to a loan application, and give your lender context to understand your financial situation and explain your subpar credit score. Depending on the lender, this can make a world of difference.
Bring more to the table:
If you want to appear more serious about an investment, you can always bring more money to the table. Professionals with Zeigler Chrysler Dodge tell us that an applicant with bad credit can increase their likelihood of being approved if the offer to put down more money up front. Having more to offer up front lessens the amount that you’ll have to borrow, and can also go a long way to make you appear more financially stable that your credit score might suggest.
Don’t hide good debt:
Yes, there is such a thing as “good debt.” If you have debts that you’ve successfully repaid (particularly on investments with positive returns, like real estate or secondary education), that looks good for you. Many people think that you should try to remove a debt from your record the moment it’s paid off, but when someone is considering you for a loan, having a successfully paid one on your record is a perfect indication that you’re a safe choice.
What if I still can’t get approved?
If you’ve followed all of these steps and still can’t seem to get approved on your own, there are still ways to finance a new car. One of the simplest and most effective solutions is to find a co-signer. A friend or family member with good credit can co-sign on a loan with you to help you get approval, but this makes it all the more important to make your payments on time. Failing to make payments or defaulting on your loan will not only have a negative effect on your credit score, but also your cosigners.
Sometimes, it’s possible to release your cosigner from their connection to the loan after you’ve made a set number of on-time payments or your credit score has improved. If someone is considering co-signing with you, make sure you discuss the specifics of what that means for you and your cosigner with the lender, before you sign.
Don’t let bad credit keep you from living your life. Follow these tips and tricks to finance a new car, even with bad credit, and make sure you’re living the life you want.