A credit score below 629 is considered as bad credit score. You can have a low credit score scored due to some reasons, such as if you have a history of paying lenders late if you do not have credit history for enough years or your identity was stolen. Credit scores are dictated what kind of interest you are going to pay on a car loan if you have a low credit score that means you will get a loan on higher interest rates.
What is credit score?
Based on your credit history your credit is measured in three digit number. There are many credit score calculation is out there in the market, the one you really need to worry is FICO credit score scale, which ranges from 300-850. Any credit score lower than 540 is at risk of being denied any kind of auto loan, and people having a score of more than 740 have a privilege of getting best interest rates.
Having a low credit score, how do you have to shop for a car?
Before buying a car, you need first to shop around to get an alternate auto loan. But most of the people believe that they got to buy from the first offer they get from the lender. The fact is that you shouldn’t talk to only one lender before purchasing any kind of finances. Auto loans can be obtained from various sources:
- Credit Unions
- Car dealership
- Finance companies
- Dealer Financial Services Group
But if you have bad credit scores, you should first know do you need a car:
- If there isn’t an emergency, don’t go for the car right now. In next six months to a year you can make your credit score right, and then you can quickly get a car.
- You check your own credit report; don’t believe on dealership’s claim.
- You have to shop around a lot for a car Your credit card’s lousy score might be for the lender only; some lenders will rate you differently.
- Keep a limit of two weeks for your search.
- Try to get a loan for a shorter
- Try to find older vehicles if it gets too hard to get loans.
- If you can manage a cosigner, it’s even better.