Bad credit isn’t a barrier in getting a loan. Not all lenders consider this as the primary barometer when choosing to approve or reject an application. Some might not even care as long as you pass their other requirements. For example, if you are gainfully employed and getting a steady paycheck, then you have a high chance of approval. The interest rates vary from matching those offered by traditional lenders to going above the average. If you need bad credit car loans, then try them out and see what they have to offer. You can reduce the cost of this loan through the following strategies:
Provide a Down Payment
If you want to lower the interest rate, then provide a down payment. The higher you can pay upfront, then lower your rate will be. This is because you are showing the lender that you really do have the financial capacity to buy a car. This also reduces the amount of the loan so you effectively push down on both factors that affect the total interest payment. If you can do it, then go for it.
Trade In Your Old Car
If you don’t have much cash for a down payment, then think about a trade-in of your current car. As long as it is in good working condition, then it should be able to fetch a reasonably high price — high enough to cover at least 20% of the purchase price of the new car. If you are not sure how much your car is worth right now, then consult an expert or check out the market rates for used cars of the same make and model.
Apply with a Qualified Co-signer
Another way to reduce your interest rate is to apply with a qualified co-signer. Maybe you have bad credit but what about your parents or your partner? If they have excellent credit, then the lender may look more favorably at your application. They know that they can count on this co-signer even if you run into financial difficulties.
Rejuvenate Your Credit Record
If you want go at it alone, then you could try to rejuvenate your credit record by making consistent payments on outstanding loans. This will show the lenders that you have made the necessary changes to get back on track. They will be more receptive the next time you apply for a bad credit car loans and you will enjoy better rates than before.