Not too many people have the extra cash laying around to let them just pop into a new or used car. So most people end up turning to the time honored classic of borrowing – getting a bank to loan you the money to finance your new ride. Sounds pretty good, unless you have to figure out how to finance a car with bad credit. It’s not game over if you don’t have good credit. The team here at Ford Lincoln of Franklin want to help deliver on your dream of new wheels, so we’ve put together some actions you can take to improve your credit during the process with a few things to work on that’ll help you with bad credit car finance.
Actions you can take to improve your credit during the process
Pay your bills on time
If you want to look credit worthy to potential lenders there’s probably nothing better to do than pay your bills on time. Credit boils down to this, it’s an installment loan – you get a big chunk of change and you pay it back over time in smaller, monthly payments. The understanding is that you’ll make timely payments. So if a bill is due, make the payment.
Pay some debt off
Think of credit like a bucket of cash availability. You can only put so much in a bucket before things start falling out. A creditor is looking at how full your credit bucket is. The closer to the top, or your limit, the less likely a creditor is to put more credit in the bucket. The best way to get more room in the bucket is to pay off some if the debt that’s already in there. Paying off some of the existing debt your carrying means you’ll be able to take on more load.
Lower some balances
If you can manage to pay off some load, that’s great. In addition to paying off you may want to think about paying down too. Any time you can lower the debt load you carry you not only increase possibility of landing your new car loan, but you also help yourself out by settling at least part of your debt. Lenders are looking at how you manage your debt load, and when you make proactive steps to getting your money matters in order, they’ll take notice and have a more favorable outlook on lending you more.
Get a cosigner
One of the strongest ways to finance a car with bad credit is to get a cosigner. A cosigner essentially backs the loan against default, that means if for some reason you end up not making good on the loan, the cosigner will be liable for the unpaid amount. A cosigned loan demonstrates to the lender that someone has enough confidence in your abilities that they’ll back you, so the creditor feels at ease and they’ll be more willing to give you a loan.
Things to watch out for that may lower your credit more
When you’re in the market for credit there are a few things you want to watch that will negatively affect your credit, too many credit checks, high credit card balances, late payments, getting charge-offs, and maxed out credit cards are sure fire indicators to lenders that a loan to you may be more than the average risk. So when you are thinking about getting into a new set of wheels be proactive and make sure that you don’t fall into the trap of getting your credit score even lower than it may already be. A little planning in the process of getting a new loan can go a long way.
Budgeting and Credit
If you’re looking to finance a car with bad credit in the Nashville, Clarksville, Lebanon or Franklin area, then the team at Ford Lincoln of Franklin is ready to help. We know how to work with less than perfect credit to get the loan you need to get you into a new or used car. And once you’re on track with your new loan, you’ll have an opportunity to clean up your financial situation with sound budgeting and credit management. Let us help you get on a new track with a new or used car loan.
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