Auto Loan with Bad Credit
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You can still get an auto loan with bad credit
It's a tale told all too often. People that are unaware of their credit score approach banks and credit unions to get an auto loan and ending up walking away with a rejected auto loan application as they have a bad credit history. It's easy to assume that as you have a regular income and can afford to make the monthly repayments that you will automatically be accepted, but this is just not the case. Lenders base their acceptance criteria largely on your credit score. If you are considering purchasing a new automobile, all is not lost as you can still get an auto loan with bad credit.
Let's look at how your credit score can affect your auto loan application and how you can get an auto loan with bad credit.
How is your credit score derived and how do you get bad credit?
When you apply for a new car loan or a used auto loan, the auto lender will check your credit report and credit score with a credit scoring company like FICO, Experian or Equifax. These companies hold records on your financial history and use their statistical models to develop a credit score. This score determines if you can be accepted for a standard auto loan or need an auto loan with bad credit.
The information that they hold consists of:
The credit score is derived using complicated statistical processes, but the end result is a three digit number ranging from 300 to 850. This score tells potential lenders just how credit worthy you are and whether you will need an auto loan with bad credit or not. The lower the number the more likely it is that you will need an auto loan with bad credit.