Planning for a Bright, Financial Future

When your credit is poor, it can be hard to get a car loan. One of your best options is to have a co-signer for your car in order to get a decent percentage rate on the loan. While you can work on ways to raise your credit score, if you need a car right away this may not be an option. If you have to purchase a car with a loan and the percentage rate is high, paying extra every month will help reduce the principal loan amount. The more you pay down the principal every month, the less money you will spend on the overall loan.

To get an auto loan, try out these tips below. 

Have Proof of Income

If you want to buy a car in a few months and you don't have a great job, supplementing your income with a second job for several months will help you get a better deal on your car. When you can prove that you make a decent amount of money every month, you show that you are financially capable of making your car payments. The more income you can show, the more likely you are to get a loan with poor credit.

Understand that Your Interest Rate Will be High

The zero percent financing or the advertised 2.9% financing you'll see advertised is for people who have high credit ratings. If your credit is poor, you are going to pay a much higher percentage for a car loan. To reduce the overall percentage you pay on the car loan, it will help to pay more on the loan every month. Pay off the car for a year, and if your credit score improves, you can try to refinance the car at a lower rate.

Understand that a New Car May be Less Expensive

While you may feel that a used car is a better investment, you may get a lower rate when you buy a new car. When a car lender gives you a loan, they take into consideration how valuable your car is going to be if they need to repossess it for non payment on the loan. A used car isn't going to be as valuable, and this is why the loan rate is going to be higher.

If you have poor credit, you may have no other choice but to purchase a car at a high interest rate. Your goal should be to pay off the car as quickly as possible, and make all of your payments on time.