Zero-Down Auto Loans - What If You Have Bad Credit?

Getting approved for an auto loan with no down payment required is possible—as long as you have excellent credit. But the subprime market is growing; so a lot of no-money-down auto lenders today have also ventured into the businesses of credit-impaired borrowers. Thus, you can get a zero-down auto loan even if you have bad credit. Let us share with you some tips on how to take out one.

1) Estimate the interest rate through your credit score.
Did you know that you can get a free copy of your credit report every 12 months? Take advantage of this privilege to check up on your credit. However, the free copy does not include your credit score. You have to pay for it if you want to see your score. But don’t worry. This is one of the best investments you can make in your life.

Knowing your credit score allows you to come up with a ballpark figure of the interest rate you can get. Having this estimate will help you prepare for the expenses like planning your budget and taking a good look at your monthly cash flow. Remember, though, that you will receive an interest rate higher than what you can get in a regular auto loan because you have bad credit.

2) Do not move out in less than a year.
What do moving out and in have to do with getting approved for a zero-down auto loan with bad credit? Lenders will look at your residential background as they assess your creditworthiness or capability to pay. Staying in your current home for at least a year is enough to show them stability, something that they also want to see in your income and job. Avoid transferring to a new home shortly before you apply for an auto loan.

3) Monitor current auto loan rates.
Believe it or not, watching the rates go up and down will help you a lot in getting approved for a no-down-payment auto loan. Make sure you know the present average interest rates when you approach a lender for negotiation. Otherwise, you wouldn’t know if the lender is getting abusive or unreasonable with its offers. Knowing what other lenders are offering will also help you negotiate for a better rate, even if you have bad credit.

4) Forget about your dream car for now.
Yes, it’s possible to obtain an auto loan—with no down payment—even if you have bad credit. But this does not mean that you should buy your dream car. Did you know that you can use an auto loan to improve your credit? Consistently pay on time and you will not fail to see a better credit.

Moreover, you might not get approved if lenders see that you want to finance an expensive vehicle. That, of course, doesn’t match your credit situation. It is also highly risky on your part to purchase such vehicle when you have bad credit.

5) Two signatures may do better.
Consider getting a cosigner. Your cosigner, who should have good credit, is going to take on the role of a guarantor when he or she signs the loan with you. That means this person will assume your responsibility as the primary borrower when you become incapable of repaying the loan. In addition, having a cosigner boosts your chances of getting approved for a zero-down auto loan with bad credit.


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Auto Approval Center is a lead provider to lenders around the US. Average APR rates range from 3.2% to 24% depending on credit. Some dealers/lenders may have implications for non-payment or late payments, please see your specific terms for more information. By applying with Auto Approval Center, you agree to have your credit pulled for lending purposes and this could have an impact to your credit score. Thank You for your business!

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