Bad credit can reduce your chances of getting the most affordable car deals available. Good thing there are ‘no credit check car loans’ for people with les stellar credit. But, is it wise to get a loan from specialised lender? Are there guidelines to find cheaper car loans without risking your credit?
Here are tips in choosing the most practical no credit check car loans in the market:
Check your credit report
Simply request from the major credit reporting agencies in the country to ensure that you can still fix any mistakes you find in any of them. Why three, instead of one reporting agency?
You don’t know which general scoring system your lender would choose, so better be prepared for it by getting all three reports.
Let’s say, you find a mistake on your credit file. Why don’t you fix it by sending a letter of dispute to the reporting company?
If you do, you may improve your score by a few points, and save a lot of money when getting a car loan. It’s because people with bad credit may have to pay higher interest rates. Lenders check your credit score and offers interest rates based on your score, among other lending criteria.
Shop around for the most affordable rate
There are many online car loans, but it is difficult to find a cheap one. Compare private lending institutions advertising no credit check car loans that offer low interest rates and low monthly installments. But, it is important to remember that what may appear ‘cheap’, on the surface still, costs a huge amount of money when compared with purchasing in cash.
All car loans carry some level of financial risk on the part of the lender, although it is lesser compared to unsecured loans. Since your car is the collateral itself, it is possible to find loan offers with lower monthly payments. By choosing the most affordable offer, you can greatly decrease its cost and enjoy the immediate financial relief of paying an affordable monthly fee. But, it is still important to carefully consider your financial circumstances in order to decide if a car loan is good for you.
Here are tips when shopping for a car loan:
- Conduct a fair amount of research. It is important to consider a variety of car loan providers before settling on the one who can offer the most attractive terms. Those with outstanding loans will need to look into their monthly income and payment schedules to ensure that they can afford to make the monthly repayments when their loan is approved.
- Borrowers with outstanding credit card bills and mortgages may seriously consider getting a debt consolidation loan to simplify debt repayment. However, this is not a good option for those who still plan to use their credit cards even after consolidating their debts.
- Talk to your potential lenders. It is not enough to will contact a variety of banks and other private lending institutions to find the best loan deals. You also need to consider borrower incentives, such as discounts, low interest rates or fee waivers, and how they can save you a lot of money in the process. Finally, never forget to enquire about the following:
- Fees attached to the loan
- Minimum amount of loan allowed
- Penalties for early repayment
- The lowest interest rates available
Pick the shortest term you can afford
Which car loan offers the most affordable rates in the shortest terms?
Car loans are generally up to about three years, but you can shorten the duration. Take a car loan that doesn’t charge prepayment penalty ort one that offers the shortest terms. Remember that the longer the loan, the higher the cost. So, look for a loan product that allows you to pay back the amount you borrowed in the shortest time possible. But, make sure that you have enough money to cover the monthly payments during that period. It is also important to set up an emergency fund, just in case you face a financial crisis during the repayment period
Look beyond the monthly payment
Check the overall loan cost. Don’t assume that because you can afford the monthly payment, you already saved money. The truth is that the overall price of the loan depends on the price of the vehicle, the value of your trade-in and the cost of financing. You will spend money not just on the monthly payment, but on what you’re being charged for the car, the interest rate and the loan itself. Don’t be deceived by artificially low monthly payment which is designed to disguise the high cost of the loan. It is a good idea to get pre-approved for the loan before you head to the dealership, so you can focus your efforts on haggling for the lowest no credit check car loan.