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A Guide to Applying for a Bad Credit Car Loan Many people have ended up with bad credit due to the unstable economy. However, just because you have bad credit does not mean all is lost. There are simple things you can do every day to improve your bad credit situation. If you are disciplined and have the willpower, you will find yourself out of a bad credit situation by applying these simple measures. Before and when applying for a bad credit car loan, there are a number of steps you should follow. Applying for a bad credit car loan with reasonable terms will be helpful in building your credit score. Steps to follow before applying for a loan:
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i) The first step is to get your credit report. Most banks and credit bureaus provide customers with these reports free of charge annually.
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ii) To get a reasonable down payment and increase your chances of getting approved for a loan, up your credit score. While improving your credit score will take time, it will be worthwhile. iii) If you have been employed at the same place for some time, lenders are more likely to approve your loan application. Generally, lenders require bad credit borrowers to have been in employment for at least three months. Being employed will also lead to getting good terms on your loan. iv) You are more likely to be financed if you offer a large down payment for the loan. The down payment usually serves as your commitment to paying back the loan. v)Having bad credit doesn’t mean you are not entitled to shop for the best terms. Just like shopping for anything else, comparison shopping will help you make to an informed choice of the best bad credit car loan to work with. vi) Contact lenders that offer bad credit financing to apply for a car loan. Steps to follow during application for a loan: i) To keep your costs down, choose a used car rather than a new one. When you buy a used car, you will require a lower amount of loan than you would for a new car. This will also lead to lower risk to the lender. Find a guarantor that has a good credit rating to back you up. You will get better loan terms when you have a cosigner with a high credit rating. After getting approved for a bad credit loan, work to improve your credit rating by keeping a budget and paying your bills on time. Also, look for ways to increase your disposable income so that you will not be financial strained to pay back the loan.