If you need a loan to cover the sizable financial cost of buying a car but you’re worried your fair credit could prevent you from getting approved, follow these steps to increase your chances.
Before you go to the auto dealership, make sure you’re ready. The better planning you do, the easier the process is likely to be. One long-term move is to save up enough money for your car down payment. This is the portion not covered by your car loan that you will have to pay the dealer. The down payment amount will be determined by the dealer based on your fair credit score. The lower your credit score, the larger the required down payment likely will be.
Next, check your credit report for mistakes. You can easily do this by requesting a copy of your report from one of the three big reporting agencies — Equifax, Experian or TransUnion. You’re entitled to one free report a year from each of them. If you do find any errors, dispute them right away with the appropriate credit reporting bureau. Once the correction is applied to your report, you should see an improvement in your fair credit within a few months. Having a better credit score will help you get a car loan with more favorable terms, like a lower interest rate.
Know what the dealer is looking for
When buying a car, you should know what the dealer takes in to account before deciding whether to offer you a car loan. One is your auto-enhanced score. This is similar to your fair credit score, but focuses on your car related financial history. The factors that influence this score include payment history on auto loans, settled or declared bankruptcy on car loans, and if you’ve ever had a vehicle repossessed. The second element that the dealer looks at is your income stability. Ideally, if you have a fair credit score — and therefore probably a fair auto-enhanced score — you have good income stability to make up for it.
Increase your fair credit score, if possible
If you can afford to wait to buy a car until after you elevate your fair credit to good credit, then do so. You will be able to get more attractive financing options and rates for car insurance. Besides checking your credit report for errors, other steps you can take to boost your fair credit score include repaying any debts you have and avoiding future debts. If you have any debts to repay, tackle the ones with the highest interest rates first. By undertaking both these tasks, you should see a positive effect on your credit score and hopefully push it from fair to good.
Make the above moves and you can put yourself in the best position possible to get a car loan — even if you have fair credit.
Coast Guard Mutual Assistance (CGMA) is a tax-exempt organization of Coast Guard people assisting the entire Coast Guard family, including Active Duty, Retired Military, Coast Guard civilian employees, Coast Guard Reserve, Coast Guard Auxiliary, Public Heath Service Officers serving with the Coast Guard, and surviving family members. CGMA...
Large bank mergers fair lending review could be enhanced with better coordination : report to the Honorable Maxine Waters, and the Honorable Bernard ... of Representatives (SuDoc GA 1.13:GGD-00-16)
Book (The Office)