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A Guide to Applying for a Bad Credit Car Loan The shaky economy has made many people end up having bad credit. However, just because you have bad credit does not mean all is lost. There are simple things you can do every day to improve your bad credit situation. If you are disciplined and have the willpower, you will find yourself out of a bad credit situation by applying these simple measures. It is important to know the steps to follow before and when applying for a bad credit car loan. You can build your credit score if you apply for an affordable bad credit car loan. Steps to follow before applying for a loan:
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i) To begin, get your credit score report. Most banks and credit bureaus provide customers with these reports free of charge annually.
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ii) Striving to improve your credit score will improve your chances of getting a good interest rate and securing you a reasonable down payment. While improving your credit score will take time, it will be worthwhile. iii) Lenders are more likely to approve your application for a loan if you are employed. Generally, lenders require bad credit borrowers to have been in employment for at least three months. Being employed will also lead to getting good terms on your loan. iv) A reasonably big down payment will go a long way in getting the confidence of the lenders. This ultimately serves as security for the car. v)Having bad credit doesn’t mean you are not entitled to shop for the best terms. Just like shopping for anything else, comparison shopping will help you make to an informed choice of the best bad credit car loan to work with. vi) Seek approval for the car loan, preferably from lenders specifically dealing with bad credit cases. When applying for a bad credit car loan, follow the steps below: i) Preference should be towards a vehicle with a lower price tag i.e. a used car rather than a new one. You will require a lower amount of loan for a used car than for a new car, which will mean a lower debt. This will also lead to lower risk to the lender. ii) Get yourself a guarantor with good credit history. You will get better loan terms when you have a cosigner with a high credit rating. When your loan is approved, take measures to improve your credit rating by ensuring you pay the installments required on time. Also, find a way to increase your income to ensure you do not end up having problems paying back the loan.