Guide to Getting a Bad Credit Car Loan

 The very first step you should take before applying for an auto loan is to get your hands on your full credit report from at least one credit reporting agency. Giving this a thorough review will help ensure that there are no mistakes or inconsistencies that could have a negative impact on your credit health. If a mistake is found, be sure to dispute it before you fill out a new credit application. While reviewing your credit report, you should also find current debts, like personal loans or credit cards, and focus on paying at least the minimum payment each month. If possible, making an extra payment here and there will help improve your credit score and enhance your approval odds. 

 After getting your credit squared away, it's time to take a look at your finances. Look at your bank statements from the past couple of months to see how much money is coming in, how much is going out, and how much you can afford to spend each month on a car. If it is your first car, you should keep in mind that you should also factor in the cost of gas, maintenance, and insurance. While looking at your finances, you should also be sure you've saved up for a down payment. Customers with poor credit are more likely to get approved for an auto loan with a higher down payment, as it lowers the cost of the vehicle, thus minimizing the risk for the lender. Most commonly, it is recommended that to have at least 10% of the car's total cost to use for a down payment. Anything additional on top of that 10% that you can afford to put down without straining your budget will certainly help. If you're looking to increase your approval odds even more, we recommend applying with a co-signer. A co-signer should be someone with more well-established credit who agrees to make the monthly payments when the primary buyer is unable to, also minimizing the lender's risk. 

 After you have an understanding of your credit score, a budget set, and a down payment, it is time for you to gather the necessary documents to apply for financing. In order to apply, you must have proof of residence, proof of income, bank statements, and a driver's license. After gathering these documents, visit Village Jeep to begin your search for the car that meets your needs. It is recommended for people with lower credit scores to shop for used vehicles, as they are more affordable than new vehicles. While you're here, our financing team will walk you through the financing process using our wide network of lenders to help find you the best loan for your budget. After finalizing your purchase, it is important to make your monthly payments on time to ensure you avoid late fees and possible repossession. On-time monthly payments will also help rebuild your credit score, which will allow you to refinance your loan for a lower interest rate, which can help lower your monthly payments and remove a co-signer. Additionally, your improved credit score will increase your approval odds for future loan applications. 

 Getting an auto loan is always an intimidating process, which is exacerbated by poor credit. Luckily for Detroit drivers, Village Jeep is here to help! Located at 31200 Woodward Avenue in Royal Oak, we're proud to offer drivers a wide selection of high-quality pre-owned vehicles along with a friendly sales and financing team that will help you get the car that you want at the rate that you need. If you have any questions regarding financing, please feel free to use the contact form below to have them answered by one of our experts We look forward to earning your business!