As with any big decision, shopping around for a car takes a lot of work. When you finally find one that will suit you and your family's needs, you may find yourself struggling to finance it. Most people cannot afford to pay for a vehicle upfront. Many people seek out some form of financing. For those with poor credit, this can seem like a daunting task. The truth is that it doesn't have to be. Bad credit car loans are popular and beneficial. Here are three advantages to seeking out a car loan when you have poor credit.
It Will Help Your Credit Score
At first, you might think that a car loan would damage your credit score further. After all, you'll have a lower debt-to-income ratio than you had before. What really happens though is that over time as you make payments, your credit score will begin to build. In fact, the more you pay, the faster it will build.
You Can Build Credit After Bankruptcy
It's a common misconception that you cannot be approved for a car loan if you have filed for bankruptcy. When this happens, you also take a hit to your credit and could have lost your last vehicle. However, there are many lenders that will help you after a bankruptcy. In fact, building your credit through a car loan could be one of the best ways to bounce back from it.
You Don't Have to Close Your Old AccountsInstead of getting rid of all of your credit accounts when you apply for a loan, you actually should keep them. The older a credit account is, the better it looks on you. This is a great opportunity to keep the credit that you have and continue to build up from there.
In addition to being able to afford the car that you want, there are many other advantages to seeking out a car loan when you have poor credit.
