You CAN Get A Car Loan With NO or LOW Credit – Here’s how!
So, you want to get a loan for something – like a new or used car, personal loan, or maybe even to start a business.
But then the realisation hits – you don’t have a ‘good’ credit score. Maybe you’ve never even applied for a car loan but you’ve had trouble meeting your repayments for something like rent, utilities, or a phone bill, or credit card.
Your bad credit history might seem like a massive problem, but the reality is that its somewhat normal – everyone has to start somewhere! In this article we’ll explore how to get your first car loan with no credit score in the easiest and most pain free way possible!
While we’re going to focus on cars in this article this advice is generally applicable to getting any kind of finance, so you’re bound to find something useful within.
Before You Start Looking For A Car Loan
You’ll find a lot of options are out there for car loans and not all of them were created equally. Many people think this automatically means you’ll have to pay very high interest rates.
But this is not 100% true – you should always get the best loan that is suited to your personal finance situation and credit score. Any lender or finance broker who tells you otherwise is bending the truth!
At Hoolu we are a finance broker that works with over 35 different lenders. This allows us to match all of our customers to the best loan options for their individual needs and situation. The result is satisfied customers who are happy with their borrowing experience.
Finding and getting the right loan for you also increases the likelihood of it having a positive effect on your future credit score. This will happen when you get a loan that is in your budget range. It will allow you to comfortably meet your loan repayments on time. The result is that you will look like a reliable candidate for a loan that can be trusted to make repayments on time.
People who are responsible with their finances are always more likely to get approved for a loan, so it’s important to start off on the right foot! Or if you’ve already started you can steer yourself in the right direction.
HOW TO: Buy A Car With NO or LOW Credit
1. Look info what your credit score actually is – first!
Wait a second… how do you even know you have a bad credit score in the first place? Obviously you should make a proper check into your credit file and find out for sure what you’re working with. The first thing you should do is check.
Just because you’ve made some payments a few days late or gone over your account limit on your credit card doesn’t mean you’ll have a BAD credit score. You may think you have bad credit because you’ve overextended your budget or are making late monthly payments, but it’s important to know for sure before making any decisions. You’ll also be able to identify what problems, if any, are contributing to your credit score so you can do something about it.
There are numerous ways to check your credit score – the main one is requesting a report from a provider. There are bound to be lots of options for credit reporting agencies and they vary by location. Most convenient – start with an internet search. Or get some help from Hoolu – if you apply we can look into it for you.
2.Repair And Boost Your Credit Score
While it might seem scary to check your credit score you should try to view it as an opportunity to improve your credit rating. By identifying areas that need attention you can begin to repair your credit score and build your perceived level of trust. Both of these will help make it easier to get approved in future while also lowering the interest rates you’ll be offered.
Think of this activity as a chance to have a spring credit clean! Make every effort you can to reduce or pay out any outstanding balance amounts, check for errors, and deal with any debt collector problems. This will help get you ready for your new loan as well as showing that you can take care of your responsibilities. You’ll also most likely boost your credit score which can make all the difference to the deal you’re offered on your next loan, which can translate to direct savings now and in future. So give yourself plenty of time, even a few months if necessary, to clean up and develop a good payment history. It can make all the difference.
3. Work With A Lender Who Actually WANTS To Work with You!
Some people approach getting a loan with the mindset of “anything will do”. But having that attitude is not necessary. Remember, you don’t have to take a loan from just anyone. Exploring your options is key to having a successful borrowing experience.
You should work with a lender or broker that is willing to work with you and your financial situation. Consider the offerings from several different lenders at least before applying. You want to have a good idea of the benefits of each option before you apply.
In our opinion the best option is to choose a trustworthy finance broker. They often have expert and in-depth knowledge of the available options. Take Hoolu for example – we match our customers with options from over 35+ lenders. This means you have more good options made available to you. Plus it saves you having to shop around and check 35+ different loan options! The end result is always a better deal for our customers.
Be mindful that if you approach a new or used car dealership you are potentially limiting your finance options what they provide. This might not result in a good deal.
4. Use pre-approval to your advantage!
Knowing that you have been pre-approved for a loan before you start shopping can make the process more enjoyable and successful. You’ll feel like you have more buying power too, which is an empowering feeling. But keep in mind you won’t have the money in your bank account until you accept the terms and conditions of the loan, so that time in between must be considered.
The pre-approval process can also help to increase your further borrowing potential when you go car shopping. It will take into consideration a no credit or bad credit score, your expenses, income and credit file. A pre-approval means that you have met the eligibility criteria for that lender and that they’re willing to offer you a loan. Using this as leverage to apply for another finance option, such as one at the dealership, can put you in a better bargaining position than you would be without it.
But you must still be mindful that bargaining for a better loan at a dealership might mean you end up with a loan that is worse than the one you started with. Think carefully about this, particularly if you have gotten finance from a broker who has considered a wide variety of options.
At Hoolu we recommend going with what option best suits you when it was taken from a wider pool of options. This usually increases the likelihood of receiving a deal that is better suited to your unique financial situation.
Important Things To Consider Before You Agree To Your Loan
So you’ve been approved and have to make a decision about whether or not to accept the loan. Before you do you should cover the following bases –
– Make sure the loan works for your budget. If you’re not sure, now is the time to work it out. Calculate your income and expenses, then find out how much your repayments will be with interest included for the full loan term. This compliments the concept that you should only borrow what you need – go for the smallest loan amount possible to cover your purchase.
– Check whether or not you can pay out the loan in advance without incurring extra charges. This is important because your goal should always be to pay out your loans as quickly as possible so you want the option to do so.
– If you can’t get a deal on your loan that will be affordable over time you should keep refinancing your loan in mind. Ask about the process for organising this before you agree to your loan. Switching to a loan with a lower interest rate can save you having to make high interest rate repayments longer than necessary. This will save you money over the life of the loan.
Generally you’ll you need to keep your account in good standing by making your repayments on time for 12 or so months. Your current credit score will also be taken into account for a refinancing application, as it is essentially an application for a new loan with a balance carried over. So make sure to keep your good credit score building habits up.
– Don’t make too many loan applications. This is easily avoided with a finance broker, but if you apply to lenders yourself you can easily create this problem. Every application you make for credit stays listed on your credit. A safe rule of thumb to stick to one application every 3-4 weeks and only as necessary.
Extra Savings Hacks For Your Next Bad Credit Loan
A poor credit score shouldn’t mean you accept having to pay more than necessary. In fact you can lower the extra spent with these handy bad credit loan hacks –
– The longer the loan, the more interest you’ll pay over time. So choose the shortest loan term possible. Of course you need to factor in whether you can make your repayments, but if you can then you should definitely choose to. If you can afford to pay back more than required then do it and do it often.
– Choose a newer car, but be mindful of depreciation. Bad credit car loans for used cars can be more expensive than those for newer cars, generally because of the overall value of the loan. Consider that you could get a newer car for less. But don’t forget about depreciation – all cars lose value over time.
– Don’t get anything extra. Dealerships will often attempt to up-sell products and services before you buy to convince you they’re good value. If it’s not necessary for the car to run and drive safely then wait until you can afford it.
Yes, You CAN Get A Loan With Bad Credit!
This might seem like a lot to take in. But once you have the swing of things you’ll be fine! Just make sure to explore your loan options, borrow within your means, consult an expert credit broker like Hoolu, and pay back your loan as quickly as possible. Yes, it’s that easy! If you’d still like some help fill out the form below and we’ll be happy to guide you through.
There’s a reason why our customers love us – we make their borrowing experience easy!
Hoolu is happy to work with you to get your bad credit loan approved! Get in touch with us today – click here to visit our contact page. Or fill out the form below!
Check out our last article to learn how to get approved for a secured loan with a low credit score!
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