Your car loan interest rate will highly depend on your credit worthiness. Good credit will get you better rates, outstanding credit will get you the advertised rates but poor credit will get you ridiculous APRs that you might not have a choice but to pay.
The first step is to find the right car deal. Whether you want to loan, hire purchase, dealer finance or lease the car is what you need to think about. The next step is to choose the car loan provider that best suits your needs.
Before getting a car loan, you might want to check your credit rating and do something to improve it so that you could get better rates for a long-term loan. Here are some tips:
Check the accuracy of information on your credit report
Your credit report has all the information about your finances as well as your contact details. Making sure that all those details are correct will improve your rating. A wrong address may cause a declined loan application believe it or not. You might also want to make sure that every single account there is yours and that there are no unrecognizable debts or open credits. If you find something you are not sure of, contact the creditor immediately and sort things out with them directly. Also make sure that every debt you settle will be reflected on your credit report.
If you have no credit history, try to get a co-signer
The best way to get approved for a car loan if you have not yet established your creditworthiness is to find a co-signer with a good credit rating. This way, creditors will be more convinced that you will pay your loan. If you cannot find a co-signer, you will have to start out building your credit by applying for credit cards that could help you establish a credit history. A car loan is a long-term commitment so it is understandable that people may be wary of co-signing with you. This may have nothing to do with the trust they have with you. It could be because this will also reflect in their credit history and will affect their rating as well.
Close down unused open credits
If there are too many open credits on your credit report, the car loan company will see this as more risk on their part. The best way is to close accounts or credit cards that you do not use and regularly pay off the ones you do use. You have to show that you are responsible in keeping up with repayments. It might not be the best time to get a car loan if you are having some problems with your finances but there are car loan companies that specialize in bad credit loan approvals that you might want to consider if you absolutely need a car right away.
Your credit score will have a big impact on your APR as it would with any other loan. This is because the better your credit rating is, the lesser risks the credit companies think they have. There are many solutions you can take advantage of if you have bad credit and one of them is to let PeoplesCarLoans help you find the best deal possible. Fill out our form to start comparing.