Getting approved for a car loan can be pretty difficult if you have bad credit, but it isn't impossible. Not only that, but you may have more loan options than you think.
Some people think that because they have bad credit that they will have to pay very high interest rates if they get approved for a car loan at all. But this isn't always the case. Don't just settle for a high interest loan before exploring your options.
Here are our tips for trying to get a cheap car loan with bad credit.
Can I get a cheap car loan with bad credit?
The first thing that you need to consider is how much to spend on your car.
Getting a cheap car loan usually means getting a cheap car, especially if you have bad credit.
Not to mention that it will be easier to get approved for a lower loan amount if you have bad credit.
There are also a number of things you can do to help make your loan application more attractive to potential lenders as well as improving your overall financial situation.
Some of the things you can do to help get approved for a bad credit car loan include:
- Increase your savings – Putting aside at least a bit of every paycheck you get will be a sign to banks and lenders that you're financially responsible.
- Pay down debts – If you pay more than the minimum repayments on credit cards and any other loans, you will repay the outstanding amount sooner and pay less in interest overall.
- Avoid dishonours – If you have bills that are direct debited from your account, make sure you always know when they will go through and that you have enough in that account. Overdrawing an account will be recorded on your credit history.
Being diligent with your savings and repaying debt will help improve your credit and make it much easier to get cheap car loans in the future.
How a finance expert could save you money
Improving your credit and your financial situation is the first step towards getting a cheap car loan with bad credit, the next step is getting the help of an expert.
While it may be tempting to organise finance directly through the car dealership, this usually is not the best way of getting cheap car loans.
Typically, car dealers do not have access to all the options available to finance brokers. After all, they're experts in cars, not necessarily in car finance.
There are a number of ways that a finance expert can help you get approved for a loan, as well as improving your chances of getting a cheap car loan. Some of these include:
- Advocating on your behalf – A finance broker can approach lenders on your behalf and advocate the strengths of your financial situation. That way, lenders will see more than just your credit history, they'll see that your current financial practices are not the same as the ones that caused you to have bad credit.
- Fixing mistakes on your credit history – People with bad credit sometimes also have mistakes on their credit file that contribute to their poor credit history. A finance expert can check for mistakes and help you get them removed from the credit reporting agencies' records.
- Providing tailored loan advice – Because Finance brokers work with you as an individual, you will get loan advice that is specific to your needs and circumstances. There are many different types of loans and loan features that you can choose from, so getting a loan that matches your needs can reduce its overall cost.
Not only are these practices aimed at helping you get approved for finance, but also at reducing the overall cost of the loan.
There are a number of ways that a finance expert can help you get approved for a cheap car loan.
Get expert advice from Rapid Finance
Getting cheap car loans with bad credit is difficult, but it's not impossible. At Rapid Finance, we have a simple three step process for helping you get your new car.
- Step 1 – You apply
It can take as little as 5 minutes to apply online, and all you need are some personal details ready to go.
- Step 2 – We find finance
You'll have a personal finance specialist who will find the strengths within your financial situation and approach lenders on your behalf.
- Step 3 – You drive away
Once we find finance, you're all good to drive away in your new car.