If you have a good credit score, finding a good interest rate on an auto loan requires a bit of work; you have to contact at least 4-5 lenders, apply, and find out which one is willing to give you the best rate.
However, if you have a bad credit score – say one under 600 – you will have to work even harder to find the right deal. And, even if you succeed in getting offered an auto loan, you will have tough time getting a low interest rate.
Your Interest Rate Depends Heavily On Your Credit Score
As you know, someone with a bad credit score has a particularly tough time getting a car loan. This is entirely due to the deep faith that 99% of lenders place in the credit scoring system. For most lenders, they completely ignore all factual data about borrowers, apart from that all-important score.
In a way, this is a bit odd. After all, it is entirely possible that someone who currently has a bad credit score actually had merely hit a rough patch whereby their score plummeted. Now, that person may have a good job and be in all other ways credit-worthy – and yet that darn score is still in the dumps.
The Other 1% of Lenders
Fortunately, there are auto lenders out there who do not exclusively take the FICO (credit) score into account when considering someone for an auto loan. This special class of lenders actually make it a point to do business with bad credit individuals. Sound crazy? Not once you know how they do business.
You see, these lenders have chosen not to just take the standard road of looking exclusively at applicants’ credit scores. Instead, they concentrate on a range of other factors that demonstrate credit-worthiness. This is how they have found a unique business niche for themselves.
If you have a low credit score, your challenge is to find those 1% of lenders.
5 Tips for Finding the Best Auto Lender
If you are looking for auto loans from bad credit online lenders, here are 5 tips for finding the best lender:
1. Look into your FICO score: Even though bad credit lenders look at a wide range of factors when considering your loan application, it is still a good idea to run your own credit report to find out your score. When you do, be sure to note any errors or glitches on your report – and be sure to get those errors corrected with each credit reporting bureau.
2. Gather your employment history and other important information into one place: One of the factors that bad credit auto lenders look at is your current and past employment history. They also look at items such as your history of owning or renting a home or apartment. Be sure to prepare all of this documentation – or as much of it as you can – before contacting lenders.
3. Create a list of at least 3-5 lenders: Now, do an online search to find any lender that advertise themselves as bad credit auto lenders. Make sure to find at least 3-5 before you start to contact them.
4. Apply to 3 bad credit online lenders: Now, start applying! Be sure to apply to at least 3 of them to make sure you increase your chances of getting the best-possible offer.
5. Ask the best one if they can give you a better rate: To the lender that gives you the best offer, be sure to go back once more and ask if they can get you an even better rate. Never hurts to ask!
Follow these 5 tips for getting auto loans online, even if you have bad credit.
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