Getting approved for financing for a new car requires that a number of things happen. First, you need to find a car make and model that you want to buy AND that is in the right price range for your budget. Next, you need to figure out how much money you have to come up with for a down payment. Then, you have to find a lender to approach about a loan. And finally, you need to negotiate with that lender until you can qualify for an interest rate you can afford.
With so many steps involved in financing, it is no wonder that people have a lot of questions. One of the most common fears about starting the financing journey is that of potentially having one’s loan application rejected. This fear can be intensified if you have a bad credit score.
New Car Financing: No Guarantees?
It is true that in the world of car financing, there are no 100% guarantees that a borrower will be approved for a loan. That is because every lender by law reserves the right to accept or reject any loan application based upon that lender’s assessment of risk. Risk, in this case, meaning: how likely is it that the borrower will repay the loan?
For most banks and other lending institutions, the two main factors that they use to judge a car financing loan applicant’s risk level are the applicant’s credit (FICO) score and their employment status. At first, hearing this is not good news for people with a bad credit score who are also unemployed.
However, even for folks in that situation, the situation is never as bad as it may seem.
Lending Companies That Offer Financing To Just About Anyone
There are lending companies that will offer a loan to just about anyone, regardless of their credit score or employment status. In fact, these lenders make it their business to actually seek out poor-credit borrowers. They do this because they have identified a unique, often-untapped market that other lenders routinely overlook.
Lenders who specialize in down-on-their-luck car financing applicants are not predators. Sure, there are a few dishonest ones in the bunch – as there are in any industry. But for the most part, these bad-credit auto loan vendors have come up with unique ways of assessing risk that go beyond the simple formula of credit score and salary.
How To Increase Your Chances Of Successful New Car Financing
100% guaranteed new car financing may be a dream, but there are ways for people with bad credit and/or no job to get the financing they are looking for. If this situation describes you, follow these steps:
1. Compile: Start by compiling information on your life situation that your lender would be interested in. For example, put together a resume of sorts, showing the dates of your most recent employment. And, put together a plan for how you are trying to raise your credit score and get a job. This information will come in handy when you speak to your lender for the first time.
2. Connect: Next, search for at least 6 or 7 bad credit auto loan lenders and connect with them. Remember, the more lenders you talk to, the better your chances of getting the offer you want.
3. Present: When talking to each lender, be ready to present them with any information they might request concerning your current financial situation. Be polite and be honest. Remember, they are used to dealing with folks in your situation every day. Do not hide anything and just tell them what they want to know.
Following these steps will greatly improve your chances of qualifying for an auto loan, even when you are down on your luck.
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