Even if your credit is less than perfect you should first check with your current financial institution and get their opinion of your chances for a car loan
First Things First - Explore Your Finance Options
Here at Auto Credit Express we believe that consumers, even those with bad credit, should explore all their vehicle finance options before starting out "on the road" to re-establishing their car credit.
In a previous article, we discussed whether or not it made sense to either pay cash or finance a vehicle through a buy here pay here dealer. Today, we'll be discussing the first step car buyers – especially those with dings in the credit – should explore once they've decided to take the more traditional retail finance route.
Banks and Credit Unions
Banks and credit unions, though they are fundamentally different, do share one thing in common: both are direct lenders.
This means consumers can walk into a bank or credit union and get a pre-approval for a car loan without having to visit a dealer.
Once approved, consumers can then shop around for a vehicle like a cash buyer. In other words, they money they borrow isn't tied to a specific vehicle. The bank or credit union gives each buyer a maximum amount to finance and that, plus other factors (specifically, loan to value – the bank will state the percentage of the vehicle's MSRP or retail value they'll finance) will determine the price range of the loan.
So how does this work for car buyers with credit issues?
Although we recommend this approach to all car shoppers, those will poor credit won't always be successful because most direct lenders have more stringent credit guidelines than the indirect lenders that specialize in problem credit applicants interested in bad credit vehicle financing.
Having said that, here are some tips for people with lower credit scores:
- For your best chances, pick a bank or credit union where you have an established relationship with a deposit and loan history
- Credit unions are traditionally more lenient than banks, although their additional services (after hours and online banking) are sometimes limited
- Banks are typically less tolerant of credit missteps than credit unions, but usually offer a wider array of services
The Bottom Line
Though they may have some flaws that show up on their credit reports, even these consumers, in most cases, owe it to themselves to check out their local bank or credit union before going the indirect lending route.
One more suggestion: at Auto Credit Express we match credit-challenged consumers with car dealers that can offer them their best chances for car loan approvals.
So if you're serious about turning your auto credit around, you can begin that process now by filling out our online car loan application.