Bad credit auto loans are extended by some loan companies to borrowers with bad credit. Although they naturally offer high interest rates, people with bad credit would still take this opportunity to purchase a car. The process in taking a bad credit car loan Nashville is almost the same as taking a regular car loan. However, borrowers would have to put a little more effort to get approved.
First, bad credit borrowers should get a copy of their credit report from the credit bureaus. This service is for free. It is better that they get their reports themselves instead of letting the lender get it. There is a tendency that they would lie about the borrower’s credit score. In this way, they get to study the report and familiarize themselves with their own financial performance. Bad credit borrowers should check for any mistakes in the report. These mistakes could contribute to making the credit bad. Borrowers then should be keen about their financial activities especially payments. If there are any mistakes found, they should be reported immediately to the bureaus. The credit report also contains the credit score. The credit score serves as the indicator of whether the credit is good or bad. Bad credit borrowers have a credit score which ranges from 620 and below.
Second, bad credit borrowers should also prepare documents which will serve as proofs of income, employment and residency. Lenders look at these documents to determine the borrower’s financial capability of making further payments for the bad credit car loan Nashville. Even if the credit is bad, the lender might consider approving the bad credit loan application if he or she sees that there is stability in the borrower’s work, residence and income.
Third, bad credit borrowers should not be intimidated to negotiate with the lender. This is the very thing that somehow separates bad credit car loans from regular car loans. Lenders here are willing to hear the borrower’s appeal. Borrowers then should not take this opportunity for granted. This is the time where they can explain their credit report and convince the lender that they are still credit worthy. It takes wit and knowledge to be able to have the upper hand in negotiating with the lender.
Fourth, bad credit borrowers can have a co-signer. This builds a good impression to the lenders. A co-signer with good credit can financially assist the borrower. He or she can make the remaining payments if ever the borrower would not be able to finish the loan. A co-signer is usually a close friend, a relative, a family member or a parent of the borrower. However, borrowers should be wary of scams involving co-signers. Some abusive car dealers would put the loan in the co-signer’s name instead of the borrower’s.
Lastly, borrowers should consider making a big down payment. This may not be easy for most bad credit borrowers. However, it will surely decrease the amounts for monthly payments and the interest paid. What bad credit borrowers could do is to delay the car purchase for quite some time first and spend that time saving up for a reasonable amount of down payment. In this way, they will also be doing themselves a favor if they make a down payment. They would also shorten the loan term thus, finishing the series of payments early.