If a financial goal of yours sometime in the New year is to buy a vehicle, it will then be necessary to think about how to best go about making this a financial reality. In addition to this important purchase, if you are struggling with bad debt or bad credit, you will also need to spend some extra time examining ways you can buy a car, without having a solid credit score.
If buying a car in 2017 is on your mind and you want to move forward with this goal as soon as possible, take a look at these 3 steps to securing a car loan that you CAN pay off.
1) Assess your Finances & Consult your Budget:
This first step involves taking a closer look at your finances and determining how much you can spend towards the purchase of your vehicle. Here you can examine your ongoing budget, if you have one, as this is a good overview of where your current finances lie. For example, your budget can tell you how much money you have coming in each month, how much money you are spending each month, and also the amount you are perhaps able to save.
While assessing your finances with a fine tooth comb, you will also see just how much debt you currently owe. This is also likely to give you insight into where your credit score lies and if at this point you are unsure, you should also secure of copy of your credit report and find out what your credit score is.
Before moving onto the next step, knowing exactly what vehicles will be in your price range will be helpful as well as how much you can afford to pay towards your vehicle over time, i.e. how you can afford to pay towards monthly car loan payments, etc. Ultimately, during this process, you will want to have all of the financial information you need to move ahead and buy that car.
2) Pay off Some of Your Debt & Improve Your Credit Score:
If, after step 1 you have found you are unhappy with where your finances are in regards to your ability to afford to pay for a car over time, it may then be necessary to look to lower the amount of debt you have. One important reason to reduce your debt has to do with the fact with a lot of debt, a very low credit score can also follow. When all is said and done, bad credit does typically make it a lot more challenging to secure a car loan – or additional credit of any kind.
Another reality associated with having bad credit and attempting to obtain a car loan, is that even when you can secure your loan you may still be subject to higher interest rates and less favourable loan terms overall. Therefore, if prior to seeking out your loan you are in the position to pay down some of your debt and rebuild your credit score, then you may find when the time comes to obtain that loan, you can drive away with more affordable car loan altogether.
3) Obtain Support from Bad Credit Car Loan Financiers & Compare Vehicle Pricing:
After you have organized your finances and taken the time to raise that credit score, you can then begin your search for the best car loan option. Since you do have bad credit and it will take some time to re-establish your credit completely, it is then recommended that you do seek out the support of car loan financiers who specialize in bad credit loans.
While there are many of these auto credit sources around, they may not all be the best fit for you. Not only should you look into what these credit sources can offer, you should also explore the vehicle prices and options too. Here you want to compare car loan terms and car loan pricing in order to secure the most affordable car loan possible.
More specifically, certain bad credit car loan sources may be able to offer better interest rates and terms to borrowers with poor credit than others. Additionally, depending on the credit source, some of the information they may require from you will include:
personal documents such as date of birth, SIN, your current address.
Your employment information, such as job history/length of employment, and your monthly income levels.
Some auto credit sources may also require less information – or more, depending on their car loan application process. All in all, this information is commonly asked, as it helps identify you as a reliable borrower despite having poor credit.
In the end, having an affordable car loan may be an extremely important part of your financial goal path . Even if you can afford the vehicle upfront you also need to take into account the ongoing costs. As you move through the car loan process, you can rely on the support and expertise of these specialists to help you identify how much you can afford to pay each month towards car loan payments.
Finally, with an affordable car loan you can also improve your credit. By making consistent car loan payments each month, you will also build a stronger payment history which ultimately makes up a large portion of your credit score.
In the end, these 3 steps can help get you to the point where securing a car loan becomes a much more straightforward and satisfying process that can extend far beyond just the initial vehicle purchasing phase.