Most people who apply for auto loans do not take sufficient time to plan the entire loan and repayment process. This leads to delayed payments, high interest rates and/ or high processing fees. And in the end owning a car can end up being a more expensive proposition than they bargained for. This fact is especially true for people with bad credit history and that is why you should always plan before applying for bad credit auto loan.
Planning before Applying for Bad Credit Auto Loan
Review your credit score: If you have defaulted on payments in the past, you know that you have a bad credit. However, it makes sense to review your credit score before applying for a bad credit auto loan. It is quite possible that your credit report might contain errors previously unnoticed by you and even a small improvement in your credit report would go a long way in helping you get better interest rates when applying for a bad credit auto loan.
You can easily get a credit report from one the three credit bureaus in the country and you are entitled to three free credit reports a year. Once you get your credit report, sit down and go through it carefully.
Create Credit Worthiness: Before applying for a loan make sure you start making all your payments on time. This will create an impression in the eyes of the lender that you are working towards eliminating your bad credit history. This process should start at least 6 months prior to applying for a bad credit auto loan.
Once you create some sort of credit worthiness, you will be able to get better interest rate and fewer of loan applications would be rejected.
Get Multiple Quotes for Bad Credit Auto Loan: Do not take up the offer made by the first lender. Get quotes for 4 to 5 different lenders and compare rates and terms of repayment. This will also give you a feel of different lenders. Although there might be just slight difference in the rates, service from lender to lender differs.
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