Bad Credit Car Loans Ann Arbor MI
Bad Credit Car Loan Ann Arbor MI
Get an Auto Loan at Dick Scott Chrysler Dodge Jeep Ram Plymouth!
We here at Dick Scott Chrysler Dodge Jeep Ram Plymouth understand that hard financial times can happen to anybody. And when they do occur, we know that getting a vehicle feels beyond the realm of possibility. However, it is our firm belief that everybody should have access to a reliable vehicle, no matter their financial situation, as a car can be a great start to getting back on your feet. This is why our financing experts are ready to help anybody in the Ann Arbor area of Michigan get a loan for their next vehicle purchase. Continue reading below to learn how Dick Scott Chrysler Dodge Jeep Ram Plymouth can help Ann Arbor drivers get an auto loan even with a low credit score!
What Should I Do Before Applying for an Auto Loan?
Before applying for an auto loan, it's important to check your credit score from at least one credit bureau. Most commonly, a credit score of 600 or less is considered low. Low credit scores can lead to higher interest rates and fewer options upon applying for a loan. Once you have your credit score, you should also look at its breakdown to understand why it may be low. Most often, it's due to late or missed payments, repossessions, bankruptcy, and excessive debt. You should go through your credit report to ensure that there are no discrepancies or mistakes and dispute them if any are found. As you prepare to apply for financing, you should work on paying down any outstanding debts, beginning with the lowest balance. While doing so, you should also consider your budget. Determining how much money you are currently spending on bills and other expenses will help you determine how much you can afford for a monthly car payment. After obtaining your credit report and determining your budget, if opening an auto loan doesn't seem feasible, it may be in your best interest to wait and work on raising your credit score before applying by lowering credit card usage and making extra payments toward current debts.
Prove Your Financial Stability
While it's true that lenders take a close look at your credit report, they also require proof of financial stability when assessing the credit risk of an applicant. Proving that you have a steady stream of income helps prove that you can meet the monthly payments without defaulting on the loan. Lenders will also look at your past credit behavior. If they see that you've managed an auto loan before with very few, if any, missed or late payments, you may experience an increase in your approval odds even if your current credit score is low. However, your approval odds may drop further if they see a repossession or frequently missed payments. It's most common for lenders to want to see a steady income stream through employment records. However, some lenders will take into account income from disability or child support payments. Be sure to tell the financing team here at Dick Scott Chrysler Dodge Jeep Ram Plymouth if you receive either of these types of payments so we can best help you get approved. Lenders will also look at your payment history, credit utilization, debt-to-income ratio, and payment-to-income ratio to determine the risk of lending. By proving that you can make monthly payments for an auto loan, you can increase your approval odds, get more favorable loan terms, and possibly lower your interest rate. When you apply for an auto loan with a less-than-ideal credit score, it can further help your approval odds to bring a significant down payment and/or a trade-in vehicle to reduce the total loan amount. Additionally, you should be prepared to provide pay stubs, year-to-date earnings, and proof of income. If you're dealing with a low credit score, this is especially important as it proves that you can make the payments.
Other Ways to Improve Your Approval Odds
It can be intimidating to apply for an auto loan with a bad credit score. Luckily, however, there are many ways that you can improve your approval odds when you apply for a loan. First, if need be, you should consider applying with a co-signer or co-borrower. A co-signer or co-borrower should be someone with a higher credit score and longer credit history who agrees to step in if you miss a payment or find yourself unable to continue to make payments. The difference between a co-signer and a co-borrower revolves around the rights to the vehicle. While a co-signer has no rights to the car and only to the loan, a co-borrower has equal rights to the loan and the car. While it may seem like common knowledge, it is important for us to note that buying a used vehicle can increase your approval odds for a loan as used vehicles are most often more affordable than new ones. If your heart is set on a new vehicle, leasing may be an option even if you have a bad credit score. If you can provide a steady, reliable stream of income, applying for a lease can be a great way to get into a new car, as payments are typically lower for leases because you're paying for the vehicle's remaining value rather than its total cost. One of the financing experts here at Dick Scott Chrysler Dodge Jeep Ram Plymouth can help you determine if a lease is right for you. Finally, there are some lenders that offer what is called either a fresh-start loan or a credit-builder loan. To qualify for a fresh-start loan, the applicant only has to provide proof of steady income, while credit history is not required. This is a great option for first-time car buyers or those who have fallen into financial hardships.
Obtain an Auto Loan at Dick Scott Chrysler Dodge Jeep Ram Plymouth
If you're in the Ann Arbor, Michigan area looking to upgrade your vehicle with a less-than-ideal credit score, Dick Scott Chrysler Dodge Jeep Ram Plymouth can help! Here, we have a team of financing experts committed to helping each customer who comes through our doors get the loan for the car they need. Visit our financing department in store to discuss your financing options and begin the financing process. We look forward to serving you!
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