Having a car is necessary for many people. It may be your only way to get to work, transport your children, and just get to where you want to go. If you have a lower than average credit score, you may be worried about finding auto financing. It is possible, however, and there are tips to help you get auto financing with a low credit score.
Tips For Getting a Car Loan With A Low Credit Score
1. Know You Score Ahead Of Time
Instead of being surprised and caught off guard when you go car shopping, look up your credit score before you get to the dealer. This way, you know what you are working with and can ask questions about that before moving further with the process.
You may think you have to go with the first lender who will offer you a loan, but this is not the case. There are many lenders who will give you auto financing even if you have a low credit score. By shopping around, you may even find that they are willing to compete for your business.
By shopping around, you will also be able to see where you can pre-qualify. You should try banks or credit unions first, as they generally have better rates. With a low credit score, a credit union may be more likely to give you an auto loan than a bank.
3. Make Sure The Terms Are Final Before You Sign
If you do get your car loan through a vehicle dealer, make sure you read all paperwork before you sign it. According to Bankrate, sometimes a lender will have you sign paperwork when the terms are not finalized. When this happens, you may be stuck paying a higher interest rate than you had discussed.
4. Try To Find A Co-Signer
Having someone co-sign on your loan can help you get approved for the financing and can make your interest rates lower. The only risky part is falling behind on your payments and damaging your personal relationship with the co-signer. If you default on your payments, the co-signer will be responsible for paying the loan.
5. Agree To Allow Your Cell Phone, Cable, or Other Utility Bills To Be Considered In Your Credit Score
Experian, a major credit bureau, has started a service that allows you to choose if you want your utility bills to be considered in your credit score. If you have paid these bills on time, it could raise your credit score, giving you more auto financing options.
Now, if you choose to allow Experian to access this information and it lowers your credit score, you can cancel the service at any time. Fortunately, it is easy to sign up for the service and even easier to cancel it and, in many instances, this has increased the credit score of those who have tried it.
Final Thoughts On Auto Financing With A Low Credit Score
You may be nervous to start the auto financing process if you know your credit is less than stellar. You don’t have to be, though. Just prepare yourself ahead of time, shop around, and try to make sure you are getting the best interest rate possible. You can also consider having your credit score include your payments for your utilities, which might just increase your overall score. By following these tips, the auto financing process should cause you a little less stress than you had originally thought.