Dependable transportation is a must for most families, especially in areas where public transportation is unavailable or inconvenient to use. But when a job loss, divorce, or other financial problem has impacted your credit, you may find that qualifying for a new car purchase becomes very difficult. If you have had the misfortune of acquiring a damaged credit rating, the following tips can be helpful in overcoming them and helping you qualify for the new auto loans you need.
1. Do your research before applying
Prospective car buyers who think their credit may be damaged but have not obtained their credit report and information to determine their exact situation are leaving themselves open to disappointment. A better plan is to take time to check your current credit report and FICO score well before the date when you plan to apply for a new car loan. By doing this, you will have an opportunity to correct any mistakes that may be on your report to ensure that it is as accurate as possible.
2. Choose a car you can comfortably afford
If your credit is less than stellar, applying for a loan to purchase an expensive high-performance or luxury model is probably not a good idea. Instead, it is important to limit your selection to a vehicle that offers:
- a payment amount that is affordable on your budget
- excellent fuel efficiency to ensure it will be affordable to drive
- good safety and reliability ratings
Additionally, it can be helpful to consider slightly used vehicles, such as those used for test drives. These vehicles, while technically not brand-new, will still have the same new car warranty coverage but may cost thousands less.
3. Be prepared when making application
Once you have selected the best model for your situation and gathered your credit information, you will need to prepare for the actual vehicle loan application process at your new car dealership. This preparation should consist of the following activities:
- gathering copies of all necessary documentation, including pay stubs or tax information to prove current income, legal identification, and a copy of your most current credit report
- preparing the vehicle you plan to trade-in
- calling ahead for an appointment with the loan manager at the dealership
In addition, it is important for vehicle loan applicants with blemished credit to have savings for a down payment. Being prepared to put down just 10 percent of the amount you want to borrow can be very helpful in getting your loan application accepted.
When meeting with the dealership vehicle loan manager, be sure to state your position honestly. These lending professionals can help you find the financing you need or guide you through the steps you will need to take to improve your credit score for a future car purchase.