Having a negative mark on your credit report can be bad news. But the good news is that there are several reputable lenders who are ready to offer you a second chance loan. For lenders to provide you a car loan with bad credit, you will need to provide “quality application” in order to get approved.
It is possible to get a car loan before the year ends provided all the requirements are met. Sadly, for those with bad credit, approval may take a longer time. Lenders happen to be strict when it comes to extending loans with bad credit. They will look into the stability of your income and good reasons to give you a car loan. Therefore, you have to demonstrate these good reasons during the application process.
Factors That May Delay Bad Credit Car Loan Approval
Negative marks on your credit history can delay car loan approval
In a standard loan application, loans are not offered to those who have bad credit. Therefore, negative marks alone can delay the approval process because lenders tend to be rigid when it comes to a car loan with bad credit. Lenders would like to see some improvements on your credit marks or a larger deposit can convince lenders of offering you a car loan.
If you are not able to provide all relevant documents required by the lenders, this further delays approval. So if you are apt to take out a car loan, make sure that all required documents are submitted to be considered.
There is some information that you may have missed to submit. These lacking information particularly in car details that you want to take out the loan for can delay your application process. So make sure that all the information required had been provided to avoid further delays.
Keep your options open
Flexibility is the key to faster car loan approval. When you are more flexible, there are more choices available to you. It helps to have a particular car and type of loan in mind but if you keep your options open, it can speed up the application process.
What Can You Do To Speed Up The Loan Application Process?
Be completely honest
Disclose all relevant information needed by the lender during the application process. If you fail to disclose your past credit history to the lender will raise red flags when they soon find out about it. Honesty is not enough, complete statements are important too. Making sure that you are not withholding any relevant information to the lender is a bad idea because they will eventually find out and it raises negative impression.
Access and understand your credit file before making an application
You can get a copy of your credit file online via major credit bureaus. When you have a copy of your credit file and you understand where exactly the negative marks or erroneous entries are, you can fix this by getting in touch with the companies that show negative entries. Making corrections can improve your credit standing.
Provide banking records
Recent bank records are very important when taking out a bad credit car loan. These records will be carefully reviewed. Lenders would like to see that you can live within your means and the ability to make regular savings. Your bank records demonstrate that you have extra income that you can use to make repayments and live comfortably.
Previous loan and credit card payments history
Your previous repayment history on other loans and credit cards will be reviewed very carefully. You should be able to show a consistent payment history. For credit cards, lenders would like to see that you are able to make above minimum monthly payments.
Stability of employment
A stable and regular income is crucial. If you have a strong and solid history of employment, this creates a positive good impression for the lenders. You will need to have kept an employment beyond probationary period with your present employer. Employees who have been employed on a casual basis will have to show a good long-term relationship with the employer. Having so many employers in a very short period of time doesn’t look good on your application.
Talk to a loan broker
Talk to a loan broker to expedite the process. They can be really helpful especially if you are not able to find the right lender for your car loan needs. Being on a bad credit situation makes you a high-risk borrower. If provided with a car loan, expect the interest rate to be higher than a standard regular car loan. A loan broker can help match you with lenders who can offer you a more reasonable interest rate.
If you really need to take out a car loan with bad credit, pay back the loan as soon as possible to avoid paying a huge total on interest rate alone. Paying off the loan sooner helps improve your credit standing, and you can otherwise take out a better car loan with better terms.