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If you are lately planning to buy a car and wondering to get it financed while having a credit score of around 650, then the first thing that will top your thoughts will be – Is it possible to get a car loan with low credit scores?
Scores like 650 or so which are close to the desired figure of 750 make it possible for you to get auto loan BUT with some efforts. Now it is purely your choice whether you want to make the efforts in earning extra so that you are capable of paying high interest or you rather make a wise effort for finding the right finance option for you while purchasing the car.
Recommended is the second one! Though this sounds troublesome but will definitely help you save a lot of money. It actually requires you to do some homework before going to the car showroom. Here’s the advisable regime if you don’t want to end up paying a huge interest.
Below-given are certain essential and required checks that one needs to do before going to purchase a car or any vehicle by getting it financed. A quick point to mention, that it is wise to purchase a car by getting it financed than by purchasing it by paying out cash in one go. This especially helps when your scores are low. If you pay your EMIs on regular basis then it will be counted as your capability to pay off credit timely and diligently and hence will affect your score sin a positive manner.
Check your immediate credit scores and credit report
The most important thing that you need to do before purchasing a car is to check your immediate credit scores and also the credit report. Whether it is exactly 650 or more or less than that, it is important for you to know so that you can discuss financing of your automobile wisely. Both credit scores and credit report can be checked on Creditseva. You will need this when you’ll discuss the finance part with the automobile seller. Mind it; you’ll be trapped in high-interest rates trap if you are not well-aware of your credit situation. Hence be wise by having the necessary information.
Check the interest rates offered by various banks and financial institutions
The way a test drive is always required to know whereabouts of a car; in the similar way it is important that you check with different car dealers about the interest rates they would offer on the car of your choice and with the credit scores that you have. Simply saying, test drive the interest rates also before purchasing a car. You should approach your bank and get to know the breakdown of their auto loan rates by credit score. In fact you can approach different banks till the time you get the interest rate and car of your choice. You’ll have to try lot of combinations before you land on something which is both affordable and as per your choice.
Try to pay a higher down payment
This is advisable as it can always save your pocket from getting drained month after month for paying the car loan dues. Try taking money from a known or a friend whom you can return later without interest. This will not burn your pocket and in addition, will save you from high payouts later too. Though it is always difficult to part with cash in hand, but it will definitely help in the long run. The more money you put down up front, the less you have to borrow, the less your monthly payments will be. So parting with your cash now can give you more cash in your pocket monthly.
Don’t go beyond your budget
This is difficult especially when we are out to purchase the car with our family as their emotions and interests are more important to us. However, it is always wise to not get drained in emotions and think in your limits. You can always try for better purchases at some later point in your life.
Though the family might not understand but you know it well that skipping payments at a current score of 650 or so can take it down even further. This is definitely not good for your credit health. You would never want to suffer at a stage when the credit is required in some emergency situation. Hence, don’t max out your budget and stay in your earning limits.
Continue to work on your credit scores
- Finally now when you have done your homework well and made up your mind that which car do you want to purchase and from where do you want to get it finance; it’s time to come back to square one i.e. your credit scores.
- Don’t forget to work on them and take them back to a healthier 750+. For this, you should try and zero all other loans and dues that you have and don’t skip any of your car loan EMIs.
- You should create an account on CreditSeva or with your existing account on the portal try to reach out to banks to help you clear your rest of loans and dues.
- In case there are any issues with your credit scores or credit report, you should also try to approach the credit agency CIBIL to rectify the error and settle dispute if any.
- The regular payment of EMIs and the follow-up with your banks will only take only a few months to take your scores back to the green zone i.e. 750+.
All in all, in the Indian scenario, it is not impossible to get a car or an auto loan with low credit scores but it only needs some efforts. Even if the banks or official financing agencies don’t help, one can try the online loan aggregators to get the desired loan. Though this should be borne in mind that these online agencies can always charge high interest.
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