Less than perfect credit scores are becoming more commonplace in these challenging economic times. Being late paying your utility bills or missing a credit card payment can be very detrimental to your credit file and compromise your credit score. However, until it comes time for a major purchase, you may not have realized how badly your credit score has been affected. If you have had a few financial difficulties, you may need to resort to a bad credit car loan to secure the purchase of your next vehicle. While this may seem a little daunting, there are a number of top tips which you may find useful.
Although this may seem obvious,you should take time to consider the affordability of your new purchase. While you may qualify for a higher amount of bad credit car loan, it will be far more detrimental to your credit file if you will struggle to maintain the payments regularly. You should calculate your income and expenditure, allowing additional funds for unforeseen circumstances to check what money you have left for the monthly payment. You will need to allow for the running costs of the new vehicle including insurance and fuel. However, your new vehicle may be more fuel efficient and have a cheaper insurance cost, making a positive impact ony our finances.
Collect supporting paperwork:
While bad credit lenders generally have more relaxed lending criteria, it can be a good idea to provide proof of your income. This can demonstrate your financial responsibility and show that you have the funds to commit to repayments on the loan and maintaining the new vehicle. You have a much better chance of securing a loan if you can show that you have been employed in your current job for a minimum of one year and that you have been resident at one address for several years.
Save a down payment:
If you have a car break down and need to replace your vehicle immediately, this may not be possible. However, if you are planning a car purchase in the next six months to a year, aim to save money towards a down payment. A down payment reduces the amount of loan needed against the purchase price but it can also demonstrate to the potential lender that you would like to show good faith in the loan. Putting a down payment in place shows financial responsibility to the lender and allows you to have a stake in the new vehicle.
Arrange a co-signer:
Some lenders will allow you to have a co-signer on the loan. This person acts as a guarantor should you fail to meet the repayments. The co-signer needs to have a good credit rating and demonstrate their financial responsibility. This can be attractive to lenders as it reduces the level of risk. However, asking someone to stand as a co-signer can be problematic, as it is a big financial commitment. They need to have confidence that you will meet the repayments or they will be held financially responsible.
If you are interested in securing a bad credit car loan,contact us. We are a specialist broker and would be happy to assist you in securing a great solution to your loan requirements.