Having Bad Credit? Here’s How to Secure a Quick Car Loan Approval In 2016
When you have bad credit, getting a loan approval can be an uphill task because the lending institutions perceive you as a high risk borrower. However, this should not dampen your spirits because in 2016, you can craft a strategy that will get you through the loan approval stage so that you can finance your car despite your bad credit status. Below are some of the tips that you need to factor in while looking for car finance with bad credit.
Maintain a Good Debt Payoff Record
While approaching a lender or broker for a car loan, you need to prove that you are paying off your debts or making savings. This record can help demonstrate that your financial position is stable as well as showing the lender that you have disposable income you can utilise on car financing together with extras such as fuel, maintenance and insurance. This alone can enhance your chances of getting an approval.
Shop for a Car within the Budget
Inasmuch as lenders can give money to people with bad credit, they are very cautious about irresponsible borrowers. Getting a car that blows the budget may make a lender reject your loan application on the basis that the amount asked for is too high. There are other costs such as registration, insurance and stamp duty that you must consider in addition to the ticket price of the car.
Use a Guarantor or a Collateral Instrument
Car financing institutions and agencies look for security particularly when lending to people with bad credit histories. To increase the likelihood of your loan being approved, you may have to use a guarantor who then pledges his property as security to shield the owner in the event you fail to honor your loan obligations. Similarly, you may decide to use the car bought as a collateral instrument. This is what is known as asset financing. This gives the dealer a layer of protection and peace of mind making it easier for him to approve your car finance even with bad credit.
Do Cross Comparisons but Don’t Submit Applications
When looking for car loans, it’s advisable that you do comparisons between products. Through the internet, you can do this perfectly well because different resources exist to help you in assessing the options out in the market. During the comparisons, ensure you get as much information as you possibly can, but do not be tempted to submit a loan application. This is because when you apply for a car loan, the broker or lender goes first to check your credit history. If you are rejected, it will appear in your credit history and this can trouble you particularly where the rejections are multiple.
As you make enquiries, state clearly to the lenders that you do not want them to check your credit history not until you are completely convinced that their loan products are the best. Submitting an application when you are sure you fit the financing provision makes it much simpler for your loan to be approved.