Got a bad credit score and worried about being accepted for car finance
14 April 2023
By Joy Pearson
Having a bad credit score can make it difficult to get approved for car finance. Many lenders view a low credit score as a sign of financial instability and may be hesitant to lend money to individuals with a bad credit history. However, there are still options available for those with a bad credit score to get car finance. In today's post, we will explore some of these options and discuss opinions from experts in the field.
Subprime lenders specialize in lending to individuals with bad credit scores. While their interest rates may be higher than traditional lenders, they can be more flexible with their approval criteria. Be sure to do your research and compare rates from different subprime lenders before making a decision. According to Jim Gorzelany, a contributing writer for Forbes, "Subprime lenders can be a viable option for those with bad credit scores looking to finance a car. However, borrowers should be aware that interest rates can be much higher than those offered by traditional lenders."
Having a co-signer with a good credit score can improve your chanced of getting approved for car finance. A co-signer essentially guarantees the loan and is responsible for making payments if the borrower can not. This can give lenders more confidence in approving the loan. According to Credit Karma, "Having a co-signer with a good credit score can increase your chances of getting approved for car finance. However, be aware that if you default on the loan, your co-signer will be responsible for making payments."
A larger down payment can reduce the amount of money you need to borrow, making it easier to get approved for car finance. Additionally, it can help lower your monthly payments and interest rates. Liz Opsitnik, a contributing writer for Credit Karma says, "Saving up for a larger down payment can help offset a bad credit score. Lenders may be more willing to lend money if they can see that you are investing a significant amount of your own money into the purchase."
Overall, having a bad credit score can make it difficult to get approved for car finance, but there are still options available. Consider all the various methods above, however, it's essential to be aware of the risks and costs associated with these options. Be sure to do your research, compare rates, and consult with a financial advisor before making any decisions.