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Getting a car finance with bad credit

[vc_row][vc_column][vc_column_text]A bad credit might get you worried that you might not be able to car loan and even when you find, it might have a very high interest rate which is very unfavorable for you.

You just need to be calm, you can still get a good deal and you need to make plans to improve your credit score so you can get better offers. Below are tips that can help you get a car loan with bad credit.

  1. Know your credit score.

You need to visit one of the bureau offices in UK to get your credit report. You are entitled to a free credit report from any of them each year. Getting the credit report can help you track where the discrepancies are coming from and know how to make adjustments so you can improve your credit score. There are some factors you can address immediately like making early payments and clearing your utilities on time.

  1. Research

You need to research and make enquiries about the available loans so you can have time to prepare.Research on key terms annual percentage rate which is a loan’s yearly interest rate.

  1. Search around for lenders
  2. Do not limit yourself to just one lender. Ensure you do thorough search for lenders as this will increase your options. There are lots of lenders who offer car loans for bad credit and they might be interested in your application. They usually run a hard check when you apply and these hard checks leave traces that show credit bureaus that you are about to take a loan and the more often this occurs, the lower your credit rating. You can visit about four lenders per day while you compare on the one to use.
  3. TryPre-qualifying with banks and credit unions

You might not be able to Pre-qualify for a car loan in a bank even with bad credit.  Banks operate for profit are usually place restrictions on who they lend to and who they don’t. If you have a close relationship with your bank, you might still be able to find a car loan that will be covenient for you. Credit unions are also non profit organizations are owned by members and they might be comfortable lending to people who have bad credit, also, they do not require account holders to be members, and their criteria for membership are quite easy.

  1. Ensure that the terms are final

Ensure that the terms are final before you agree to sign documents given to you by a lender as if they are not, you might have to face paying higher interest rates in future when the prices rise. This is know as a “yo-yo scam.” It usually involves dealers telling buyers that their financing is not final and they would have to pay a higher interest rate.

Try as much as you can to avoid subprimelenders

Subprime lenderscater for people who have bad credit and usually make the initial car buying process easy for them.They usually appear like a sure bet for people who want to buy cars but their interest rates are very high and they cannot improve your credit scores. Most of them use your car as a collateral, so if you do not pay, you stand the risk of losing your car. You can consider Sub-prime lenders if you were not able to get a car loan. Some lower monthly payments appear enticing to buyers but in reality they are not as good as they appear.

  1. Consider getting a co-signer

You can ask a family friend or a member of your family to accompany you and go through the negotiation with you, this will boost your confidence. You can as well ask them to be a co-signer this will lower the risk fir lenders. Using a co-signer can lower your interest rates but you should ensure you make payments as the debt will fall on them when you fail to do so.

  1. Be on the lookout for scam

Before you accept any contract for loan, check well to ensure it is not scam as there are so many untrustworthy lenders operating.

Bad credit do not result to bad terms but they can make it difficult for you to get a car loan and you may face unfavorable conditions and interest rates. You can start by finding the right loan for you, paying it off and improving your credit score. This will help you find better loans with better terms.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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