If you’re looking to get a car loan, here are some steps you can follow:
- Check your credit report and credit scores: Before applying for an auto loan, it’s important to check your credit report. You can get a free copy of your credit report every 12 months from each of the major reporting bureaus (Equifax, Experian, and TransUnion) at AnnualCreditReport.com. Lenders will use your credit report to see how well you’ve managed credit in the past, so it’s a good idea for you to review it first. Look for errors — such as late payments that weren’t actually late or fraudulent accounts you never opened. If you find such errors, file a credit report dispute to correct them before you apply for a car loan. Your credit score and your income will determine how much you qualify to borrow — and at what interest rate.
- Shop auto loans with more than one lender: There are many lenders that offer loans to people with bad credit, including online lenders, credit unions, and peer-to-peer lending platforms. It’s important to compare lenders and their terms to find the best option for you.
- Get preapproved for an auto loan: Many lenders allow you to pre-qualify for a loan without affecting your credit score. Pre-qualifying can give you an idea of what kind of loans you may qualify for and what interest rates you can expect.
- Use your loan offers to set a budget: Once you’ve been preapproved for an auto loan, use the loan offers to set a budget for your car purchase. This will help you avoid overspending on a car that’s beyond your means.
- Find your car: Once you have a budget in mind, it’s time to find the right car for you. Research different makes and models, read reviews, and compare prices at different dealerships.
- Select and finalize your loan: Once you’ve found the right car and negotiated the price with the dealer, it’s time to finalize your loan. Be sure to fill out the application completely and accurately, and provide any additional information or documentation that the lender requires.
Remember that having bad credit doesn’t mean that you can’t get a loan. By following these steps, you can increase your chances of getting approved for a loan that meets your needs.