It takes years to build a good reputation and only a few mistakes can cause a disaster. The same ideology applies to your credit score. A few serious mistakes such as missing a payment or two on your loan could take years to repair the damage. But, a bad credit score is not the end of your world. A handful of misconceptions and myths revolve around a bad credit score. And, they discourage people from taking action to improve their credit score. With the help of pre-approved auto loans, you can break those myths.
Forget the Bad Credit Myths; Focus on the Facts
1) Myth: Taking an auto loan will worsen my already weak credit score
Fact: Applying for an auto loan with a history of damaged credit will increase your debt-to-income ratio. However, it is not an indicator that obtaining an auto loan will worsen your situation. In fact, with the help of a pre-approved auto loan, your credit score can increase over a period of time. Timely monthly payments are the key to not only stabilizing but also improving your credit score.
A bad credit score may bring the possibility of high interest rates. However, a pre-approved auto loan contains the advantage of pre-negotiating the interest rate that eliminates any last minute surprises and helps you to efficiently plan your future expenses. Therefore, a pre-approved auto loan will help you to increase your credit score.
2) Myth: A poor credit score means no lender will work with me
Fact: In the case of bad credit history, bank financing is dicey. On the other hand, there are numerous online lenders that specialize in bad credit auto financing. Despite you having a bad credit score, these lenders wish to increase their business and will grant you an auto loan.
Credit scores vary from one individual to another. So, a lender may even willingly give you a pre-approved auto loan if your score is higher than the other applicants. As many applicants have zero credit score, you stand a greater chance at obtaining a pre-approved auto loan.
3) Myth: The first auto loan deal is the best deal
Fact: Many people fall prey to the thought that bad credit means no bargain. A damaged credit history compels people to take the first deal that the lender offers them. However, comparison shopping is the best method to get the lowest price.
You must study the current market before making a decision. Always have two or three competing offers to help you leverage the best deal. A pre-approved auto loan will help you in negotiating effectively as you will have a realistic price in mind. Moreover, researching the interest rates and the price of the car you wish to buy will assist you in getting the most out of your pre-approved auto loan.
Many myths exist when it comes to bad credit. The fear of a weakened credit score, inability to search for a lender and dismissing comparison shopping are a few myths that need reevaluation. When it comes to buying a car with bad credit, do not discard the option of pre-approved auto loans. Remember to understand your situation thoroughly and work with lenders who do not shy away from helping people with damaged credit.