If you have low credit score, you may think that buying a new vehicle is out of the question. At New Jersey State Auto, we can help you even when others won't. Our easy prequalification process, flexible lenders, and extensive selection of quality vehicles can help you get back on the road today.
What Is a Bad Credit Car Loan?
When buying a car, lenders will look closely at your FICO credit score. Your FICO score includes your total debt, payment history, and length of your credit history. Credit scores can range from 300 to 850. The higher your credit score, the more likely you are to qualify for a loan with a low-interest rate. Things that can negatively affect your credit rating include having a short credit history, making payments more than 30 days late, and incurring lots of debt.
A bad credit rating is any rating that is at or below 580. Car loan options are still available to you, even with a low credit score. If you're timely with debt payments, you're more likely to get a loan with a low percentage rate. Other factors that can help you get a low car loan rate include having a stable job, being a homeowner, and providing a down payment of 25% or more.
Steps to Take Before Applying for a Loan
Take a look at the top eight things you can do to get a better auto loan rate when you have bad credit:
- Review your credit report: You can get one free credit report per year from each credit bureau. It's a good idea to review these reports a few months before you're planning on buying a new car.
- Dispute credit report errors: Look over your credit reports closely, and note any inaccuracies. Errors on your credit score can lower your credit rating and make it harder to qualify for a loan. Resolve credit disputes by contacting both the credit bureau and the agency that reported the inaccurate information. Expect to spend approximately 30 days resolving credit disputes.
- Improve your credit score: You can put yourself in a better position by improving your credit score. Don't open new lines of credit or take out new loans. Pay down your debt and make payments on any overdue accounts. While tempting, don't close any credit card accounts unless you have to. Closing down credit card accounts reduces your total credit limit, which can negatively affect your credit score.
- Save money for a down payment: If you have poor credit, a down payment on a car can improve your chances of getting a car loan. A down payment can also help you qualify for a better interest rate and will lower the total amount you need to borrow. A smaller loan equals less interest paid, saving you money. You can build a down payment fund by setting aside a little money every month.
- Get a cosigner: When you need a new car sooner than later, you can ask a family member or close friend to be a cosigner on your loan. Having a cosigner with a good credit rating can help you get a better rate on your car loan.
- Know your monthly budget: Before choosing a car and applying for a loan, calculate the monthly loan payment you can afford. Your monthly auto budget should include your loan payment and continuing car ownership expenses such as gas, oil changes, tires, insurance, and parking fees. You can lower your monthly car payment by stretching your loan out over a longer period, but be aware that a longer repayment period means paying more interest.
- Get prequalified for a loan: Prequalification saves you time and can help you avoid unnecessary hard credit checks. A hard credit check alerts the credit bureau that you may be adding debt, which can lower your credit score. Getting qualified at New Jersey State Auto won't affect your credit rating.
- Balance monthly payments and loan terms: Once you have determined the monthly payment you can afford, compare loans to find the one with the most favorable terms and interest rate.
New Jersey State Auto's Application Process
New Jersey State Auto's easy pre-approval process helps us find the right kind of financial assistance for you. The only documents you need to apply for a loan are a driver's license, a pay stub, a utility bill, and your down payment. Best of all, because our pre-qualification process isn't a hard credit check, it won't negatively impact your credit score.
The pre-approval process only takes minutes at New Jersey State Auto. We can pre-approve you over the phone, in our office, or through our simple online application. Pre-qualification is free and only requires basic information, such as your name, address, telephone number, e-mail address, social security number, and birth date. All of your online information is strongly encrypted to protect your personal and loan payment information.
Benefits of Working With New Jersey State Auto
New Jersey State Auto works with an extensive network of financial institutions and car financing companies. These relationships allow us to find a payment plan that works for everyone, no matter your credit score or budget. We'll work with you to create a custom financing package that gets you on the road today. Our friendly and knowledgeable staff have helped customers in Pennsylvania, Maryland, Virginia, Washington D.C., New York, New Jersey, Delaware, and Connecticut.
Not only will you get the best financing at New Jersey State Auto, but you'll also benefit from our large inventory of affordable used vehicles. Families will love our extensive collection of SUVs, minivans, and four-door sedans. If you need a work vehicle, check out our selection of hard-working trucks and commercial vans. We also carry hatchbacks, convertibles, and many hybrid models.
We provide a CARFAX report for every vehicle on our lot, so you can feel confident in your purchase. New Jersey State Auto's prices can't be beat. We price every vehicle at or below its Kelley Blue Book value.
Don't let a bad credit score prevent you from getting the vehicle you need. If you want a quality used car at a great rate, visit us at New Jersey State Auto.