Online Auto Loans Are the Answer for Those with Bad Credit

Do you know your credit score? The sad fact is that today many people spend most of their young lives answering that question with a “no.” Many of us fail to see how credit is really much of a big deal until we are in a situation when, well, it is a big deal. Nowadays, the chance of having enough cash to afford a new vehicle out-of-pocket is slim. So, for most people, the first time that credit will play a big role is when you go to purchase a new automobile. Therefore, having bad credit when looking for an auto loan can pose a major barrier to getting the vehicle you need.There Are Still OptionsThose with bad credit are people too and they have needs like anyone else. Though nine out of every ten lenders that you talk to will take credit as the sole consideration when deciding whether or not to lend to you, you need to take advantage of that other 10%. These so-called bad credit lenders specialize in extending credit to those whose FICO scores are less-than-perfect. They are used to working with people in a similar situation and will be able to help and counsel you through the auto lending process.The Bottom Line with All LendersWhat it all boils down to when a lender is assessing someone’s application for credit is the likelihood of repayment. When a lender cuts you a check, all he wants is reassurance that you will pay him back, which makes sense. The interest that he charges is the way that he makes money and reflects his assessment of the risk you present in those terms. The riskier that he believes you are, the more interest he will charge you.This is where the credit score comes in handy. The Fair Isaac Corp. developed the formula for calculating FICO credit scores as an easy way for a lender to assess his risk. Your job as the borrower is to show lenders that your FICO score is not reflective of your ability to make your repayments on this new auto loan.Stand Out from the CrowdThere are several ways that you can approach the lending process. You can simply submit an application like everyone else, knowing that when the lender does a background check he will discover your bad credit, or you can go the extra mile and provide a lender with additional information that shows him why that credit score is wrong. Guess which method is more effective?Consider putting together a portfolio of sorts that will highlight why, despite your FICO score, you are a creditworthy candidate. Submit income history, letters of reference and be willing to openly discuss the situations that led to your bad credit in the first place. Being proactive is one of the best ways to ensure that you will have the upper hand in lending contract negotiations.Shop AroundThe final tip that I can offer you is to make sure that you are not putting all your auto loan eggs into one lending basket. Make sure that you speak to at least three and up to five different lenders about what you need and your particular situation. By shopping around, you are more likely to find the best rate available and you may also find a lender with whom you really click. The better your relationship with the lender, the easier bypassing your bad credit and finding an auto loan will be.