How to Increase Your Chances of Securing an Auto Loan with No Credit or Bad Credit
Are you shopping for a used car loan near Green Bay, WI? At Broadway Credit, we are proud to help drivers of all credit backgrounds secure their first or next car. Of course, we want to help you get the best deal on your next ride. Here are a few tips for getting approved for a car loan with challenged credit.
Save for a Down Payment
Saving for a down payment is one of the best things you can do to prepare for your car loan. Anyone securing a car loan should plan on putting down at least 20%. If you can afford it, try to put down closer to 20%. With a down payment, you are showing your lender that you are serious about paying off your loan and, in return, may help you land a better loan offer. Not only that, but your down payment will help you pay off your loan quicker and save you lots of money in interest in the long run.
Provide Proof of Income
On top of your down payment, you will need to provide proof of income. This could be in the form of current or future employment that shows the lender how much you earn. With this information, the lender will better understand how much you can afford to pay towards your loan each month and be able to offer you a loan that fits your budget.
Choose a Loan that is Affordable and Can Save You the Most Money
Before signing for your loan, you should consider all your options. For instance, you may be offered two different loans of two different loan terms and interest rates. You should choose the loan that is affordable to you and can save you the most money.
Let’s check out an example of two possible loans offered to a buyer. Loan A is a 5-year loan with monthly payments of $175 and an interest rate of 6%. Loan B is a 4-year loan with monthly payments of $300 and an interest rate of 4%. If the buyer is comfortable paying $300 each month, Loan B is the most cost-efficient and less time-consuming loan option to choose. If the buyer is not comfortable paying that much per month or is unable to, then they should choose Loan A as this is the most financially safe option available.
[ READ MORE: Benefits to Financing at Broadway Credit ]
Consider a Cosigner
If you are still having trouble finding a car loan that best suits you, you may want to consider a cosigner. A cosigner is someone that agrees to be a secondary borrower to make the payment if you are unable. If a payment is missed, there will be a credit dent on both parties’ credit scores. Due to the nature of cosigning, it’s vital that the borrower and cosigner trust each other and agree to the loan conditions together.