Having bad credit will impact your ability to be approved for financing, or otherwise affect the loan terms that you’re able to receive. In fact, you may find that you won’t be eligible for any kind of loan from any lenders.
The lower your credit score, the more you can be expected to pay when lending money. Not only will the repayable amount be affected, but you may also be limited on the overall amount a lender is willing to loan to you. People with poor quality credit scores don’t tend to be approved for high value loans.
Getting A Car Loan with Bad Credit
First off, there is a significant chance that you’ll need a down payment or deposit on your vehicle if you have poor credit. Not only that, but if you are only approved for an amount less than the sale price of the vehicle, you will need to make up the difference.
Although, that’s not to say there aren’t lenders that specialize in poor credit loans without a down payment. An easy way to find and compare lenders, and whether or not they suit your needs, is to use a financial comparison site to quickly compare hundreds of lenders.
When applying for all-terrain vehicle (ATV) loans with bad credit, you should also be aware that some lenders may restrict the amount of time available to repay the loan, providing shorter loan term agreements than if you had a healthier credit score. In the long run this can save you interest on the overall repayment cost, however, monthly repayments can be significantly increased.
When applying for any financial aid, it is always important to way up to cost vs the benefits. You need to remain in a position to comfortably afford your agreed monthly repayment, while finding a vehicle that suits all your needs. It is always worth breaking out the calculator and sitting on any final decision for a few days to make sure you are making the right choice.
There are several steps you can take to improve your chance of not only being approved for finance, but to receive better offers when you are approved.
1. Fix Your Credit Score
When you decide the time is right to purchase a new vehicle, before you visit any showrooms or start shopping around the first thing you should do is obtain a copy of your credit report. This can be done online, and are quite easy to find. The health of your credit report is the most impactful factor on whether or not you will be approved for finance, and the level of agreement you will be offered. It is best practice to check your credit report occasionally as there may be errors or issues that need addressing; these can even be falsely attributed to you, so you need to dispute them immediately.
2. Budget
Now that you know the health of your credit score, it is time to budget accordingly. You need to weigh up your options here, especially when dealing with bad credit. When your credit health is poor, you’re likely to face higher interest rates from the lender — this will increase your overall expenditure. However, depending on your budget you might need to opt for a longer-term loan to reduce monthly outgoings in lieu of increasing the overall cost.
3. Shop Smart
While you can’t negotiate your interest rate with the lender, it’s likely that you can negotiate on the vehicle’s price, thereby reducing the amount you’ll pay over time. Try shopping around several dealerships and get them to price-match against each other; this works especially well towards the end of the month when salespeople are aggressively trying to meet their quotas. Also avoid purchasing unnecessary upgrades; leather seating, air conditioning, and improved alloys, aren’t typically required. Another way salespersons try to get you to pay more is by upselling an extended warranty plan.
4. Check Your Loan Agreement
Always check your loan agreement thoroughly before signing it off. Double check it, if necessary; regardless of whether you’re sourcing the loan online or through the dealership. Ensure there is no ambiguous language contained within, and confirm anything that you don’t understand with the lender. Make sure all the information is accurate, and that all fees and rates are clearly stated.
5. Use a Credit Union
More likely than not, credit unions will offer better auto financing options than banks and other lenders; they tend to be more flexible too. Joining a credit union is as simple as opening a bank account, and once you have a checking or savings account, or a credit card, you are free to inquire about ATV loans.
By sticking to terms of your credit agreement, ensuring you make your monthly payments on time, you’ll improve the health of your credit rating. This opens you up to the possibility of refinancing your ATV loan in the future, securing a better rate for yourself and lowering your monthly and overall costs.
Photo Credit: Alfonso Benayas
If you have shit credit, then do you really need to be spending your money on a toy?
I definitely get your point, Frank. However, there are lots of different types of ATVs; many of which people use as work vehicles and/or to support a business.
Well… unless you’re a hunter, trapper, fishing guide, farmer or similar ilk, you most likely don’t NEED an ATV at this time. Better you get a part time job (After this health crisis is over!) and use the time you’d be cruising around on an ATV for earning money to put in a savings account or to pay off your other monthly bills to improve your credit. How about getting totally debt free before going further into debt for a machine which may be repossessed for non payment down the road? Go to the many garage and yard sales each week and see the disdain with which once expensive items are treated and sold cheaply to savvy shoppers with good credit who don’t buy useless clutter and do buy things they need slightly used. If the bank doesn’t want to lend you money they have a reason. The reason is they think you can’t pay the money back and they’ve been down that road many times.