Auto Loan with Bad Credit – Louisville
What happens when you finally have found that perfect car? If the feeling of joy suddenly comes up, congratulations. If not, you may be facing an extra hurdle before you can take that perfect car home. How are you going to pay for it?
This is the challenge that plagues many new automotive buyers each day. You find the right car after doing weeks and weeks of intense research, test driving, and decision-making. You may even have set up a budget so you know ahead of time whether you can afford it or not. Still, unexpected expenses and issues arise.
If you’re buying used, there may be additional fees for maintenance that has to be done before it is ready. If you’re buying a new car, you likely have taxes, dealership fees, and other expenses that aren’t on the final price tag. If you have bad credit, this can make matters even worse.
Finding an auto loan with bad credit is a special challenge for countless buyers. A bad credit history, financial troubles, or other issues can lead to a less than ideal score when it comes time to find the right loan. You may feel like it is impossible for you to get the best loan that will allow you to purchase the car you want.
That, however, couldn’t be farther from the truth.
Can I Get An Auto Loan With Bad Credit?
Yes! This is the million dollar question. It is easy to feel like you have no hope of getting a good auto loan with bad credit. After all, loan providers will be examining your credit history and score during the application process. So how can you have any hope of getting a good auto loan with bad credit in Louisville?
This answer comes down to many influential factors. For one thing, not all auto loans are the same. Each loan will have different requirements and an application process to go through. Some loans may be off the table, sure, but others may be still available to you. The trick will be finding the right loan or having help to do this for you.
There are also steps you can take to increase your chance of finding the right loan. Small steps to improve your credit history, for example, can open up new possible loans before you buy a car. Depending on your budget and financial situation, you may be able to reduce the amount of a loan you will need in the first place.
The point is you have options. Don’t feel limited by bad credit if you haven’t explored the steps you can take to make it work in the end. Finding the right car is important to feeling like you have something that will work for you and your family. If an auto loan is the only thing standing in your way, you should explore these options.
Searching For The Right Auto Loan
The first thing to realize is you can find a loan in places other than the usual spots like banks and credit unions. While these are good places to start with, they tend to be more challenging for individuals with bad credit. This is because their application standards and process are meant for general loans. Anyone who needs a certain amount of money, for a car, school, or other general reasons can apply. This means they have to work with a whole variety of applicants.
Expand your search for the right auto loan by checking out different sources. For example, dealerships will often offer loan options to their customers as well. Some even offer bad credit auto loans as an option. These loans will have lower standards for your credit history during the application process. This could make your dream of purchasing that perfect car a reality without having to take smaller loans or give up because you aren’t approved.
As you search for the right loan, it’s important to understand the specifics of any offers you get. All loans are different, meaning they will have different rates and terms to them. Auto loans for bad credit, for example, tend to have higher rates to make up for the bad credit. In the end, you may be spending more on the car compared to a regular loan. Given this potential setback, make sure you explore all of your options before signing on the dotted line. A bad credit auto loan can be the perfect solution for people with no other options, but it’s best to do the research first.
Improve Your Credit
It can seem almost impossible to improve your bad credit, especially in a short period of time. While you can’t magically turn it into astounding credit overnight, there are several small steps you can take to improve the score. Best of all, many of these steps will produce an almost instant effect so you will see the improvement before applying for the loan.
First, look over your existing credit debt to see what you can pay off. Many bad credit scores are due to large amounts of debt. The credit reporting bureaus that determine your credit score look at the relationship between your credit debt and credit limits. The closer you are to the limit, the worse it is for your credit score. Paying off some debt, even if you can’t pay off the entire amount, will increase the gap between the debt and the limit. This, in turn, will improve your credit score.
You can also look for any errors with your credit. Sometimes, credit card companies and reporting bureaus make mistakes that ultimately affect you and your credit score. For example, sometimes a credit card company will fail to report that you have paid off some debt or meet a specific payment. Look through your financial records to see if any mistakes have been made. Pay attention to payments you have made along with the charge amounts each credit card lists.
Work with us to understand and assess your credit history. We like to make sure our customers explore all their options to afford the car they really want. Whether you want a new or used vehicle, we can help you figure out how you may improve your credit score before applying for a loan.
Reduce The Loan Amount
Even if you can’t improve your credit score overnight, you may be able to still qualify for a loan. The application criteria is somewhat different depending on the size of the loan. Generally, the smaller the loan, the easier it is to qualify. This means you may be able to get an auto loan if you aren’t asking for as much money.
On the one hand, this means searching for a car that is cheaper. If you feel like there is another alternative that would meet your needs and wants, think about applying for an auto loan for that car. This can be a good alternative when the cheaper car still has all the features, safety systems, and general performance you’re looking for. You won’t have to sacrifice on anything that you want except for some of the higher-end amenities you can probably live without.
If you can’t make an exception, the best way to reduce the loan amount is with a higher down payment. The more you pay upfront, the less loan you will need to have. This will not only open up more potential loans to you, it will also lower the amount of money you are paying back each month in the long run. This will make it more financially manageable throughout the entire duration of the loan.
The trick is to determine the amount of a down payment you can afford. You shouldn’t be spending anything you don’t have or can’t part with. If you have other expenses to take care of, it’s best to keep the amount you increase the down payment by small. You should also pay off as much credit card debt as you can to improve your credit score before spending money on a higher down payment. A better credit score will help you in the long run well after you have purchased the vehicle.
Commit To A Budget
One area many people have trouble with is determining if they can afford a car in the first place. Expenses and fees quickly add up as you begin to go through the car buying process. For example, it is easy to search for more expensive vehicles thinking you may be able to afford them before finding out the harsh reality. This usually happens because people don’t have realistic expectations about what they can really afford.
A budget is a simple solution to this problem. Before you look at any car, you need to know what the maximum amount of money is that you can spend. This budget will help you stay within your financial means while searching for a car. Anything that falls outside of this budget shouldn’t be a consideration.
To determine your budget, think about your financial stability right now. How much debt do you have? What is your monthly income? What other expenses do you have that are more important than a car? The answers to these questions should give you an idea of what you can realistically afford. Resist the temptation to increase or overestimate your budget. If the budget isn’t realistic, it won’t do you any good.
As you search for a car, stick to this budget. Keep in mind that any list prices will be below what you ultimately pay. Dealership fees, taxes, and other expenses always come up and increase the final price. Your budget should accommodate these extra expenses so you aren’t thrown off when it comes time to sign on the dotted line.
A budget will also help you determine what kind of auto loan you should consider. Even auto loans for bad credit need a budget. It might be tempting to go with a higher loan to afford a better car. However, a budget will quickly tell you if a loan is too good to be true. Loans that exceed your monthly income and debt will lead to future financial troubles that you can easily avoid right here and now.
Get Some Extra Help
Finding the best financial option for you when buying a new or used car is a process. It takes time, commitment, and small steps in order to find the right solution. Whether it is an auto loan for bad credit, improving your credit score, or just simply researching the automotive options that are available, it can feel challenging at times. This is why it can be a good idea to call in some reinforcements.
Extra help throughout this whole process can alleviate the stress and present alternatives you might not have considered. Our staff is excellent at helping our customers find the right options for them. Whether it’s exploring their financial solutions or finding a new car, we will help you however we can.