Purchasing a new automobile can be an exciting time, but for the vast majority of people, it means a new monthly car payment. For someone with bad credit, applying for an auto loan can be a scary thought. The idea of being turned down by a bank can be embarrassing and incredibly discouraging. That's why many people with bad credit have ideas about auto loans that are just plain wrong. Here's a look at some of the most common myths about getting an auto loan with bad credit.
Myth #1: Obtaining An Auto Loan With A Bankruptcy or Bad Credit Is Close to Impossible Many people with poor credit or a bankruptcy on their credit report may think that obtaining a car loan during this time is nearly impossible. But especially during these economic times, lenders understand that people fall on difficult times, and that a car loan is a great way to rebuild credit. Even bankruptcy doesn't have the stigma that it once did, and you may be able to obtain a loan as long as you can prove you have a reliable source of income. Some lenders are very quick to tell you they'll work with bad credit or no credit, but be leery of these companies and check with companies you know. Lenders that "specialize" in these cases often have incredibly high rates.
Myth #2: Getting Details on Financing Automatically Lowers the Score
Despite knowing how important of a number it is, there's a lot most people don't know about their credit scores. It's a common misconception that your score gets lower every single time it's checked. But the truth is, your score will not be lowered if you have several inquiries from the same type of loan within a small time frame (a week or two). This allows people to shop around for the best rate, and make sure that you're not penalized for trying to save money. If your credit is a concern, don't be scared to check with several lenders.
Myth #3: Bad Credit Equals A Huge Down Payment
It's true that a large down payment will give you more favorable loan terms, and may make you more likely to receive a loan with bad credit, but it couldn't be further from the truth that a large down payment is always necessary. Even with bad credit, plenty of dealers should be willing to work with you even if you only have a moderate down payment. In fact, if a dealer is insistent that the only way they'll help you is if you have a huge down payment, don't be afraid to move on.
If you do find yourself in a situation where you need automobile financing, but you have bad credit, don't let these myths fool you! As long as you have a steady job, you should find plenty of options for both loan vendors and car dealerships. One of the biggest keys is to not be intimidated by someone who insists they're the only ones that can help you. Don't be afraid to look around until you find your perfect loan and car. Talk to experts like Auto Max for more information.