Bad Credit Car Loans in Rhode Island

It’s a simple fact of life that nobody’s perfect: we all have weaknesses along with our strengths. For some people, imperfect credit is among their bugaboos, and sometimes it’s simply the result of life’s normal difficulties, like divorce, job loss, or illness. Lenders understand that credit challenges can happen to just about anyone, and that’s why many of these financial institutions have come up with special loan programs for applicants with lower credit scores. After all, a vehicle is a necessity for most of us, and a little help in securing one can go a long way.

How do bad-credit car loans work?

Vehicle loans for people with below-average credit scores work generally the same way as any other loans, but they tend to have specialized terms. These terms can be higher interest rates, weekly payments instead of monthly, and other parameters that help the lender minimize the risk of financing people without a solid history of paying their debts on time. If you’re being turned down for loans, your goal at this point is to get approved for an auto loan with terms you can live with. The good news is that as you make your payments, your credit score will eventually rise (as long as you don’t open new credit elsewhere). After some time, you can apply to refinance your car loan to a lower interest rate.

What’s considered a low credit score?

There’s no quick answer to this question, since individual lenders set their own score cutoffs for whom they’re willing to work with. FICO, the reigning credit authority, uses a scoring system that ranges from a high of 850 to a low of 300. In general, if your score falls below 580, you have poor credit and will likely need a specialized loan.

What is a FICO score?

FICO scores are the most universally accepted credit scores. The three-digit system makes credit scoring uniformly fair for all consumers and shows at a glance if you’re a trustworthy borrower.

Where can I get a copy of my credit report?

Once each year, you can get a copy of your credit report at no cost from the three main credit bureaus: Equifax, Experian, and TransUnion.

How can I bring up my score?

Missed payments now and in the past are the biggest threat to your credit score, so it’s crucial that you pay all of your installment loans and other regular payments on time. You should also aim not to use too much of your available credit because that raises your debt-to-credit ratio – another red flag that catches lenders’ attention. In other words, if you have a credit card with a limit of $10,000, try to use as little of that available credit as possible. And if you have a credit account you’re no longer using, don’t close it: it still counts as available credit and will improve your ratio if your credit report shows that you’re not using credit just because it’s there.

How much does my credit score impact my interest rate?

While that’s up to the individual lender, in general you will pay more interest if your credit score is low. This reflects the risk that the lender takes in entering into a loan contract with you, since your credit history shows flaws and they can’t be sure you’ll make your payments as agreed. People with high credit scores have proven that they’re responsible with the money they’ve been loaned, and they’re rewarded with low interest rates.

What should I do before I apply for an auto loan?

Pay off as much existing debt as you can, and save up a down payment. Any down payment is better than none, even if it’s just a few hundred dollars. Check your credit report for errors (especially items you’ve paid off that are still showing as delinquent). If you find an error, gather the proof that you’ve made good on the debt, contact the creditor, and ask them to set it straight.