Even if Seattle is one of the most flourishing cities in the United States, borrowers with bad credit still exist in the city. Getting approved for an auto loan can be a struggle, or perhaps nearly impossible, for these borrowers. However, there are many lenders today who are willing to help and give them a reasonable interest rate. Here’s a step-by-step guide on how to get quickly approved for an auto loan despite a damaged credit.
STEP 1: Get a copy of your credit report.
The first thing every auto loan borrower must do before applying for an auto loan, regardless of what kind of credit they have, is to get a copy of their credit report. Are you aware that you are entitled to a free copy every 12 months from the nation’s three major credit reporting agencies? All you have to do is submit a request at AnnualCreditReport.com. Check your credit report at least six months before actually applying for a car loan or mortgage, financial advisers suggest.
However, you will not see your credit score in your free copy. You would have to purchase it separately. Advisers say this is okay as the credit score you pay for gives you a more precise idea of the interest rate you could most likely get.
STEP 2: Review your credit report.
Your credit report may contain errors or inaccuracies. You should go over your credit report once you receive it so that you can dispute any error as soon as possible. Mistakes in your credit report can lower your credit score. You might get a higher interest rate than what you’re supposed to if you don’t deal with the errors before applying for an auto loan.
It’s ideal to do business with a lender located near where you live. It’s more convenient this way. However, that doesn’t mean, though, that you can’t look for lenders in other areas of Washington.
Find a lender that has enough experience in helping people with bad credit. Consider looking in banks, credit unions, dealerships and online lenders for the best deal. You can search on the Internet, in your city’s directory or by asking for recommendations from friends and family.
Make sure to compare auto loan rates and terms as you shop for lenders. An auto loan calculator is an excellent tool for comparing quotes.
STEP 4: Comply with the requirements.
To increase your chances of getting approved for an auto loan, be sure to comply with all the requirements. Supply the necessary documents that prove your income and employment stability and financial capability to pay off the auto loan on time. Lenders need to see these in your application so they can grant you the amount you’re requesting.
STEP 5: Repay the loan towards a better credit.
Many borrowers realize this too late: Getting approved for an auto loan when you have bad credit is an opportunity to rebuild damaged credit. You can acquire a higher credit score in months by making your monthly payments on time. Moreover, when you do, you can even jump to a new auto loan with a lower interest rate by refinancing your current loan.
Taking out an auto loan with bad credit may be possible and even easy for some. However, it would be best if you weren't complacent once you are approved. You still have to work to improve your credit so that you can get more easily accepted for an auto loan in the future.