Are you looking to apply for a used car loan in the Evansville area? Are you curious to know what you need to do to get approved? There are certain things you must be aware of that will help improve your chances of a successful application. Everything from research to budgeting, down to the dealership you decide to do business with must be considered.
It’s important to do your homework when looking for a trusted car dealer, Evansville has many great dealerships locally. However, before you jump in, you first need to educate yourself. And luckily, you’re in the right place for that.
Here are 4 things you need to do before applying for a used car loan.
1. Evaluate Your Financial Status
Look at where you currently are financially, and honestly ask yourself, “what are the odds of getting that stamp of approval?” Taking on a car loan will often garner a comprehensive credit check. If you have a poor credit score, this will make it more difficult to get a loan due to your unfavorable financial ranking.
But that only applies to a bad credit score. If after your financial evaluation, you determine that you’re in good financial shape, then getting a car loan will not only be much easier, but it will further strengthen your already positive credit score due to the payments that you consistently make.
2. Research Prospective Auto Dealerships
Depending on where you go, some dealerships will reject you outright for a bad credit score. While others will work with you, or in some cases, even help you with your bad credit score. So be sure that you do your due diligence when it comes to selecting the dealership.
There are auto dealerships that will provide financing and payment plans if they deem you are trustworthy. And in those cases, yes, it is possible to have a successful application even with a poor credit score. Try searching for those types of pre-owned vehicle dealers, Evansville has a few, so be on the lookout. And once you find them, make sure that what they offer is a good fit for you and your needs.
3. Know Your Budget and Stick to it
Once you have taken the time to go through your finances, be honest with yourself about what you can realistically afford to pay each month. This process will also help you to know what cars are available to you based on your price range.
Nothing is worse than having “too much car” in your driveway. When you have a payment eating away an inordinate amount of your income each month as a result of poor planning, it can cripple you financially. So be smart; know what you can afford, and stick to it. Getting a nicer car to impress your friends and family is not worth the financial strain.
4. Optimize the Odds of Getting Approved
If you’ve decided on your car as well as the dealership from which you want to obtain your loan, there are a few things you should consider so you don’t get ignored when applying:
- A credit score with payments made on time – If there are any recent payments that you have missed, that won’t look very good. Again, some companies may overlook these blemishes, but others may not be so tolerant. So do what you can to clean these up.
- Retain a debt to income proportion below 43% – The smaller the number, the higher the likelihood of you getting the approval for a loan.
- Use a cosigner when you apply – When you have a second party that can vouch for you as it pertains to your revenue and credit score ranking, it may up your chances of getting a loan. But word of caution here; always pay, because if you fail to honor your commitment, your cosigner will pay the price via a damaged credit score. And that can be enough to tarnish a good relationship.
- Save for a down payment – If you can save a decent amount for a down payment, this communicates to lenders that you can handle finances, and they will be more likely to approve the loan under such circumstances.