In many parts of the country, a car or truck is a necessity. Unless you’ve managed to save enough to pay cash for your next vehicle, you’ll have to get an auto loan. But what if your credit is bad? Can you even get a loan?
There are car loans for people with bad credit, but you need to be careful when shopping for one to make sure you aren’t overcharged.
If you’re looking for a bad credit auto loan, the first step is to check your credit report and scores. This step is critical, because one of the reasons auto shoppers overpay for these loans is because they think their credit is worse than it is, and they settle for whatever they can get.
You can check your credit scores and get an easy to understand overview of the information in your credit report for free once a month at Credit.com. In addition to your score, you will see what factors are having the most impact on your scores.
There’s another reason to check your free credit reports: you may find mistakes on your credit reports that, if fixed, will help boost your credit scores. If possible, give yourself at least thirty days to dispute credit report mistakes before you start car loan shopping.
After you have checked your credit and fixed any errors, it’s time to start shopping for an auto loan to see what is available.
Be smart about your credit while you are shopping for an auto loan. Every time a lender pulls your credit report, it creates an inquiry on your file, and these inquiries can hurt your credit scores. Most scoring models will count auto loan inquiries with a certain window – usually 14 – 45 days – as a single inquiry. To be on the safe side, then, limit your auto loan shopping to a two-week period to avoid damaging your credit scores even further.