One of the fist things we are told when applying for an auto loan is the importance of a good credit score. It can not be stressed enough that the better your credit score, the likelier you are to secure an auto loan. Therefore, when one asks the question, “What can I do to improve my chances of getting an auto loan?” we are usually met with the standard response that points to the importance of building and maintaining a solid credit history. Hands down, the best way to improve your chances of getting an auto loan is to raise your credit score. While this advice is true, it typically doesn’t help a person who needs to purchase a vehicle if they don’t have the luxury of waiting many months or years while working on improving or establishing credit.
A Co-signer, Steady Income and/or Down Payment Will Help
If you need to purchase a vehicle, and do not have the time it may take to raise your credit score, there are a few other things that you can do to improve your chances for approval. One way of easing the approval process is by finding a co-signer. A co-signer is a person, usually a friend or family member, who will guarantee to the lender that you will make timely payments. Cosigners are individuals with a good credit history who sign the loan application with the primary borrower. A co-signer also accepts responsibility for the loan in case you default on the payment.
Another way you can give yourself a better chance of getting approved is if you can show evidence of a steady income. Lenders vary in terms of requirements, but if you can prove that you have worked at the same company for a period of two or more years, it will significantly help in securing first time auto loans.
A large down payment will also help in obtaining approval for an auto loan. This shows the dealer that you are a serious buyer and that you are not likely to default on your payments. A large down payment may also help keep your interest rate low and more manageable. The bigger the down payment, the better the loan terms and likelihood that you will get approved.
Buy Here, Pay Here
Finally, dealerships known as ‘buy here, pay here’ will be the most likely to finance an auto loan regardless of credit history. These dealerships, often advertised on radio and in print, usually make statements like “we finance anyone” or “come on down and we guarantee you will get in a car today!” Buy here, pay here dealerships not only sell you your car, but they also become your banker. It is important to remember that because the dealership is taking a risk on you, they will most likely require a high interest rate. For this reason, it is essential that you purchase a cheap car that you can afford. Keep your auto loan payments low, build up your credit, and pay off the car as soon as possible.
BlueSky Auto Finance can help you in obtaining an auto loan. For more information in applying for auto loans through BlueSky Auto Finance click here.