When it comes to taking loans, the credit score plays a vital role. The credit score is calculated based on information collected in your credit reports. Everyone has a credit score and if you have taken loans in the past that you were unable to pay back on time because of one reason or the other, you tend to have a bad credit score.
There are many things that contribute to bad credit score and sometimes, circumstances lead to it.
Does credit score matter?
But if you are planning to get bad credit car finance, you may face many problems. Already, the interest rate on these finances is very high and when you add a bad credit score to it, it becomes even worse. This happens mainly since lenders consider you a risk and hence charge a very high interest rate. The situation might seem a little dull now but there are many things that you can do to make the situation better and even get the required loan at a feasible interest rate. Credit score does matter but other factors are also considered before a loan is lent to a person.
How much money to take?
When it comes to loans, one thing that must be looked at is the income you have. This means that you need to know how much income you have, how much money you spend on your everyday basic needs, or on luxury, what can be compromised on and how much of an installment can you bear monthly? There are online budget calculators where you can provide the required information to get a fair estimate of what you can afford to pay back.
Who should not go for bad credit car finance?
Keep in mind the fact that there are many credit specialists out there who do not charge interest on the loan. These people might insist on a need to take on extended warranty or other add-ons that you think are not required. You do not need to listen to these people. Any agreement that says that if you miss 1 or 2 installments, the car would be repossessed should not be signed either. These dealers would coax you to do so because repossession gives them good money and a deal like this is bound to fail. Instead, go to the mainstream dealers or lenders as they would guide you better and would want to get the money back and hence will give you a better deal.
Improve your credit score
You can improve your credit score. This does not take a very long period as most people can improve it in the time span of 1 to 2 years. If you think that you need to have a car right away and cannot wait for it any longer, then you should try to get one that is comparatively inexpensive. Cheap or second-hand cars have a market of its own and just because it does not come with an expensive logo, does not mean that it does not perform well. It would serve the purpose and would be much easier to finance as the amount of money that you would need to take will drop marginally. A short term loan with less money means that the interest you would need to pay less monthly and a bad credit car finance of this much money would be easy to take and also be very helpful in the long run. The car of your dreams can be bought later when the money you have agrees with your demands.
By Lauren Bracy
who is a qualified blogger and loves to write blog on different topics, like home décor, Automotive, health, Business, Food, Lifestyle, Flowers, Finance etc.