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How to Get a Car Loan with a Bad Credit Report

All Advice You'll Ever Need

Having a credit report that reflects on your financial past in a way that is not so bright and shiny might give you a lot of trouble when you want to get a vehicle through a car financing plan. Just as a person must keep his criminal record clean, in order to be accepted and respected as a valuable member of the community, he must keep his credit report in the best possible condition, as well, so that he would be regarded as a valuable member of the financial community. Having a bad credit report can make your financial life a bit tougher, especially when you want to get a new loan, since it governs the reactions of financial institutions towards you. However, there are ways to make this experience a lot easier that it is. But first, we must see what a credit report is.

What is a credit report?

A credit report is sort of your financial dossier that keeps track of your obligations in the financial market, and the way in which you have handled those obligations. It is available upon request, and it is free to check it once a year, by going to the relevant government agency that deals with credit reports. It shows whether you have paid your installments in time, defaulted on your payments, gone bankrupt and everything else that might have impact on your financial security. Everything that you do concerning credits, loans, bills, etc. stays on your credit report for seven years. After that it is deleted. When you are applying for a loan, the first thing that the financial institution will check is your credit report and they will propose their loan terms accordingly. The better the situation on your credit report, the better the terms will be.

 

If, however, you credit report has suffered some bad reports in the past, this will mean that you will get higher interest rates, since you will be valued as a less trustworthy customer. It might also happen that you get rejected by some financial institutions that will not deal with people who have bad credit reports. But, do not despair, as there are ways to change this slightly in your favor.

Find a lender who works with bad credit car loans

There are certain lenders who specialize in dealing with people who have bad credit ratings. The best place to find them would be to look online, as there are many of them who operate that way. These lenders offer a bit better loan terms for the people with bad credit than ordinary lenders do. Some of them also have a way of helping you clear your credit report for the future by offering advice and assistance. You should beware of car dealerships that offer deals for people with bad credit, as they are usually trying to get more money than they should, by abusing your financial situation.

Consider improving your credit report

The credit report, even though it is an official record, is not set in stone. There are a few things that you might repair, before heading out for loan shopping, thus improving your chances of getting accepted for a loan. The first thing that you need to check on your credit report is whether there are any inconsistencies with the real life. It might happen that some things were written on your credit report due to a human or a bureaucratic error. If you find anything that you think should not be there, feel free to contact the institution in question and ask them why is that there. Any institution that does not answer within 30 days is bounded by law to remove their derogatory remarks.

The second thing that you can do to repair your credit report is to get more regular with your payments and wait some time before applying for a loan. Having a string of regular payments and lessening outstanding debts will improve your score greatly and show the lender that you have gotten serious about your obligations.

Think what you need

When deciding what type of a car to get, it might happen that you wish to follow your dreams that are not quite realistic. Consider your monthly income and your current debts and obligations before choosing the car that you will get. Being realistic is very important, in order to get approved for a loan. Also, choosing a sedan over an SUV or a sports car, for example, will go a long way towards lessening the amount of money that you spend monthly on gas, and, as we all know, gas prices are going sky-high these days and they do not show any signs of coming down soon.

As I said at the beginning, having a bad credit report can make scoring a car loan very difficult. However, by following some simple rules, you ensure that you will still be taken seriously and get access to loan offers that can be considered good for someone with bad credit. If you are having any difficulties when working on your credit report, it may be wise to consult some bad credit lender, as they have the expertise in working with bad credit ratings, and their consultants will help you get the best out of your situation.

More Stories By Anne Lee

Anne Lee is a freelance technology journalist, a wife and a mother of two.