For those who have less than perfect credit, the dream of purchasing a new car may seem like an unachievable one. This can be especially true if scores are low due to bankruptcy, repossession or delinquent auto payments. Getting Default Car Finance is possible, though there are some things one should be aware of before attempting it.
Some people feel they will never have the opportunity to buy another vehicle if they have ever had a car repossessed. As long as the action was not part of a bankruptcy, it is possible to prequalify for a loan. However, in this scenario, prepare to be required to produce a larger down payment and to have choices limited to only newer vehicles with active factory warranties.
As for bankruptcy, as long as it has been discharged or an Authorization to Incur Debt has been received from the trustee, it is possible to qualify for a loan. Be aware that applying after a Chapter 13 filing may be a slightly longer process. The attorney handling the case will be able to advise when one is cleared for new purchases.
The first thing to remember is that this type of financing is a second chance and should not be taken lightly. Proceed with caution and be aware of potential scammers who preying on people in a bad credit situation. Taking the time to do a little preparation work before beginning the search for a new vehicle could save both money and disappointment.
Being aware of one's credit score can be a big help in this endeavor. That number will be crucial in the decision making process. With it, a person can use an online calculator to see what kind of APR they would qualify for. This knowledge is also protection against unscrupulous dealers who would try to take advantage in an attempt to create a more profitable sale.
A wise move would be to try and clean one's credit up a bit before submitting the first application. Generally speaking, a score of less than 600 will come with a very high APR. Applicants should obtain a personal copy of their report, review it carefully for any errors and file a dispute to clear them up to improve their rating.
Be cautious about submitting too many loan applications. Each time someone runs a credit check, the score is affected in a negative manner. One loophole to this process is that any inquiries of the same nature that are processed within 30 days are counted as a single item, which is not as harmful as having them done over the course of several months.
Try to get a prequalification for the loan before beginning to search for a vehicle. The preferred Default Car Finance option would be a bank or credit union since they are likely to provide the most acceptable rates and conditions. Only go through the dealer if no other choice is available because the APR is probably going to be higher and they often tack warranties and other extras onto the loan in order to increase profit.