Don’t Let Bad Credit Get You Down
No one wants to admit defeat, especially when it comes to personal finances. Whether you are young, old, unemployed, or make $80,000 per year – bad credit can hit anyone, at anytime. Usually, the problem increases over a period of time, and people ignore the truth because they don’t want to face the consequences of their actions. Just as an ignored cavity will eventually turn into decay and result in having that tooth pulled, so will bad financial decisions spiral out of control when neglected for long periods of time. When it comes to a poor credit score, the more you ignore it, the worse it gets. As defeating as that may sound, the good news is that there are ways to increase your credit score, and dig out of debt. One of the easiest and most earnest ways to reverse your current credit situation, is to understand your options for bad credit car loans. Ohio residents turn to McCluskey Automotive for a second chance, and for the opportunity to turn their financial circumstances back around.
Understand Your Situation
Before you race out to a dealership and get a car loan with bad credit, it is important to know where you stand, and to understand your situation. First off, know your credit score. There are free online tools that allow you to access your credit score easily, and without a credit card. Take advantage of this, and locate your credit score ASAP. Go ahead…I’ll wait.
Now that you know your credit score, let’s take a look at what it means. According to Experian Automotive, your credit score puts you into one of three categories of borrowers: Deep subprime, subprime, and nonprime. Borrowers with a credit score below 500 are considered to be deep subprime, and are the worst off in terms of the ability to secure loans and decent interest rates. Those with a credit score between 501 and 600, are considered to be in the subprime category. While not the worst off, these borrowers will still have trouble securing a traditional loan, and will likely need to get creative in their efforts. The third credit risk category is nonprime, and includes borrowers with a credit score between 601-660.
Know What Your Credit Risk Level Means
As you may have guessed, borrowers with deep subprime and subprime designations have a harder time securing an auto loan than those who fall into the nonprime category. The same study from Experian Automotive went on to report more specific interest rates that each borrower could expect to pay. At the time of the study, the average interest rate on an automotive loan for a nonprime borrower was 9.29 percent. The mid-level subprime borrowers paid an average interest rate of 15.72 percent, while deep subprime customers were hit with interest rates that spiked upwards of 19 percent.
This information may be unsettling to you, especially if you fall into the subprime or deep subprime levels. While it may elicit doomsday feelings, rather than your ability to see the light at the end of the tunnel, knowing your credit situation is the first step to rebuilding it, and digging yourself out of debt.
Get Approved for an Auto Loan No Matter What
Rather than get upset over your current financial situation, remember that it is only temporary. The only way to move forward and rebuild your credit score, is by taking out loans and paying them back on time. As upsetting as it may be to learn that you will likely have to pay higher interest rates than other borrowers, don’t allow this fact to deter you from securing an automotive loan.
Dealerships like McCluskey Automotive understand where you are coming from, where you have been, and where you ultimately want to be – and can help you get there. With in-house financing, McCluskey Automotive is able to guarantee financing for every person who walks through the doors, regardless of which credit risk level they fall into.
Why Paying the Higher Rate Will End Up Paying Off
Some borrowers throw their hands up and storm out of dealerships when they realize that their interest rate may be higher than they would like. The truth is, dealerships who take on high-risk auto loans need to charge higher rates in order to provide services to deep subprime borrowers. Regardless of why you are in the financial situation you are currently experiencing, take ownership of it and don’t let something like a high interest rate stop you from reaching your goals. Take a look at reasons why accepting the interest rate your credit score allows, will end up paying off in the long run:
- Rebuild Credit: Credit scores won’t improve dramatically over time without action. While certain discrepancies will disappear from your score after an allotted period of time passes, your score will not increase magically overnight. The only way to rebuild your credit back to where it needs to be is by borrowing money from accredited lenders. Every on time payment you make will be reported to the Credit Bureau, and your score will gradually increase over the life of your loan.
- Refinance Once a New Credit Risk Level is Reached: Just because you buy a car today with a high interest rate, doesn’t mean you will be stuck paying it for years into the future. Keep an eye on your credit score, and when it increases to what is considered a low-risk number, trade in or refinance your car for a lower rate. After all, the goal is to help you dig out of debt, not bury you deeper in the hole.
- Rebuild Your Life: If you need a car in order to secure a steady job, or transport your kids safely to school each day – you can’t afford to turn down an auto loan simply because it has a high interest rate. Resolve to make the changes necessary to rebuild your life in 2017, and take the first step with a bad credit loan from a reputable car dealership like McCluskey Automotive.
Be sure to stop by and talk to our professional and knowledgeable team to find out how you can drive home in a new-to-you car today.