If you want to buy a new or used eco-friendly car, you may need to consider taking out a loan. Because well over 80 percent of shoppers now use a car loan or lease to purchase a new vehicle, your chances of paying for the car with credit are quite high. Whether you are approved for a loan, how much money you are approved for and what your interest will be all depend on your credit score and history. If lenders determine that you are a bad credit risk, loan denials may crop up for you all over town. Here are some top tips for you to take into account as you consider how to finance your eco-friendly car even with a low credit score.
Check Your Credit Report
As you start down the path of financing, you will first want to take a stop at your credit report. While it can be easy to bury your head in the sand over this important document, it will have the most bearing on the type, amount and cost of the loan you will eventually get. You are allowed to get one free credit report from each of the three major credit reporting bureaus each year. Check your report carefully to ensure that there are no errors. Make sure that your name and address are correct and that there are no inaccurate loans or lines of credit listed for you.
Take a Few Months to Build up Credit
Once you have your credit report in hand, you will know your official score. If you can take six months or so before purchasing your car, use this time to build up your credit. Even if you cannot get it to an excellent rating, you may at least be able to get it high enough to get a slightly lower interest rate on your upcoming loan. During this time, pay all of your bills and loans on time, make at least the minimum payment and pay down as much extra debt as possible. To build better credit, you may want to open a secured loan for six months or become a cosigner on a loan. As long as payments are made on time, this can increase your rating.
Commit to a Big Down Payment
Now is also the time to save up money for a down payment on your new vehicle. The more that you can put into the cost of the vehicle initially, the lower your interest, taxes and fees will be once you sign your loan.
Getting pre-approved before you head to the dealership will give the dealer increased confidence in your ability to pay. It can also help you know how much you will be able to afford, thus giving you a better idea of what cars on the lot could be yours.
Bring along Good Credit Documents
Even if you have bad credit, you may be able to improve your standing when you bring along certain documents that prove that you pay bills fully and on time. If your credit score is low simply because you have very little to no history, you can still prove your credit-worthiness by showing the dealer or lender recent pay stubs or paid bills, such as rent or utilities.
Find a Bad Credit Car Loan
Today, you have many options for getting a car loan through a lender that specifically caters to those with bad credit. By going through one of these lenders, such as Hamilton car loans, you can find lower rates and even $0 down options many times.
Choose a Standard Model
If you are working with bad credit, your loan may not be for as much as you would have hoped. Content yourself with a basic model of eco-friendly car rather than with one that has all of the fancy features.
Consider Extra Costs
When purchasing your new vehicle, consider all of the other costs that will go with it, such as the cost for a title and state and local fees. Also be sure to choose a vehicle that will not eat up your budget with constant repair bills, leaving you unable to pay for your loan.
Plan to Keep It
Be sure to choose a car that you will be happy to keep for the next several years. If you plan on trading it back in a year or two, you will certainly lose plenty of money on interest that you paid on your loan.
This may seem like quite the process, but it is certainly worth it to get the eco-friendly car of your dreams. Whether you are looking at a hybrid, an electric car or another option, your investment and your work to find the perfect loan for your credit score will be worth it when you consider how much you will benefit the environment. Above all, be honest with yourself about what you can afford, and never go over your spending or loan limit.
Article Submitted By Community Writer