This is a very common question, and the answer is yes, you can still get a car loan! Getting and maintaining a car loan can be a great way to improve your credit score. Be cautious to keep the payment at an affordable amount. Every day many people are able to get a new vehicle despite having problems with their credit history. In this post, we will review what factors affect your ability to get a new (or used vehicle) on credit.
3 Necessities to get a car loan:
Number one is a Job. To get a car loan with bad credit, you need to have steady and verifiable employment. Lenders are looking for ways to decide if you are to make your car payment in the future. Maintain steady job time to show you can be reliable and maintain your income to pay your bills. Lenders will always verify the amount of time that you are employed. They have access to multiple methods of technology and electronic records to verify that what you say on your application is accurate. Never lie on an application for credit. At the least, your application will be declined, and the most you may be prosecuted for Bank Fraud, which is a criminal offense.
Number two is a residence. When you have had past credit problems, lenders will want to know they can find and contact you if ever you are in default (late) on your loan payment. Have your utilities in your name. Keep proof that you live where you say you do. Don’t use a cell phone bill or bank statement printed from the company web site. These are not viable proofs and you will have to resubmit your proof before your loan can be finalized. If you can’t prove where you live, you reduce your chances of approval of a loan.
Number three, a drivers license. Make sure you have a valid drivers license with your current address listed on it. If your address listed is not current on your ID, go right to the DMV and apply for an updated license. Although this will not override the requirement for proof of residence, it will increase the level of comfort a lender has in helping you get a car loan. This will result in getting more favorable terms.
Are you ready to apply now?
What not to do while applying for a car loan:
Don’t quit your job. Now, remember, you are being approved based on the information you have provided on your application. If you quit your job, you will not have any income to pay for your new car. As a result, you risk having the approval taken back and losing the chance to purchase a new vehicle altogether. You have little chance of getting a new car if any of your information changes before your loan is funded.
If you are about to go shopping for a new car, do not apply for other types of credit. It is not a good sign to lenders when they see an applicant with recent new credit on their report or recent credit inquiries. Make sure you are selective in who and where you apply for credit.
Do not lie on your application. When you have had past credit problems, lenders are very thorough when they review your application. They will ask you to prove what you have stated on your application. They also have many resources and techniques for verifying this information from 3rd party sources. If you are caught falsifying information for your application, your approval may be taken back. In some cases, it can happen after you have left the car dealership with the vehicle. Always be sure you are providing true and accurate information on your credit application and NEVER falsify documents required for loan approval.
You have just reviewed three basic tips for applying for a car loan when you have had past credit problems. Have a job, proof of where you live, and a current drivers license. You also know that it is not a good idea to apply for credit before getting your new car. Remember, borrow responsibly and make appropriate plans to be able to afford your new car payment. Make sure you are taking the proper steps to begin rebuilding your credit with a car loan.