Your past missteps do not define you, and life should be full of second chances. But if you have poor credit, getting out from under its shadow can feel impossible. Fortunately, an auto loan for poor credit can turn that shadow of poor credit into a pathway to a bright financial future. One such program is Camino’s Second Chance Auto Loan Program.
Camino Federal Credit Union has served Montebello with financial guidance tailored to each member’s needs since 1941. We partner with each member to help them achieve financial success, whatever that looks like for you. Here’s what you need to know about securing an auto loan with low credit and how our program can help!
Securing an Auto Loan with a Poor Credit Score
It could be more challenging to qualify for an auto loan with poor credit, but it is not impossible! From understanding the impact your credit score has on Camino’s Second Chance Auto Loans, here is how to secure financing with a low credit score.
Understanding the Credit Score Impact
Know your credit score before applying for an auto loan with poor credit. Your score is calculated using factors like payment history, length of credit history, and what you owe.
It is common to find higher rates, fewer offers, and more lender scrutiny when you score below the mid-600s. Sub-580 is considered poor. Your score will give you a better idea of the types of loan offers to expect, which can be advantageous in this journey.
Also, understand that shopping for an auto loan could also result in a temporary hit to your credit score, so if you are shopping for rates, we advise doing it within a 14-day period.
Strategies to Improve Credit Score for Loan Approval
Once you have your credit report, to secure an auto loan for poor credit, there are several steps you could take to improve your credit score where possible.
Are there mistakes in the report you can dispute, and correct? Are accounts showing past-due payments that you actually paid on time? Do you have delinquent accounts that you could bring current or low-balance accounts you can pay off?
These could all be helpful strategies to improve your credit score and the types, terms, and rates of loans available to you!
Navigating the Approval Process with a Low Credit Score
When applying for an auto loan for poor credit, gather documents well in advance so it goes smoothly. You will need proof of employment and income.
Lenders will look at your debt-to-income ratio (DTI) and credit utilization. Your DTI reflects your monthly debt obligations divided by your gross pay, and it will be difficult to find a loan if it is above 45%-50%.
If you already paid off accounts and have less debt than your credit report suggests, be ready to prove this. Credit utilization reflects how much credit you are using, and lenders typically want to see that you are using 30% less than your available credit.
If your credit usage is higher, but you’ve recently paid down your balances, be ready to prove it. Your payment history is a major factor when lenders make decisions. Be ready to explain the circumstances of late payments and why it won’t happen again.
They may look at your payment-to-income ratio, too, which measures whether you can afford a loan and insurance payments. Ideally, it would be under 20%. How much you need to borrow could improve your chances of approval.
Two ways to do so are through making a larger down payment and trading in an existing car. Finally, having a co-signer with good credit who would agree to make payments if you default could provide a crucial safety net and improve your chances of approval.
Camino’s Unique Program for Borrowers with Low Credit Scores
At Camino, we offer a unique program for borrowers with low credit scores called the Second Chance Auto Loan Program. Even if you have had credit problems, this program can help you purchase a new automobile, truck, or van for up to $30,000.
The Second Chance Auto Loan Program gives approved members up to 72 months to repay the loan, and you will not be penalized for paying it off early. Plus, we give you the tools to succeed and avoid missing payments.
With direct deposit features on your account, you can rebuild your credit, providing you with greater opportunities. Features of this program include:
- Fixed loan rates
- The positivity of pre-approval
- A variety of terms up to 72-months
- Up to 100% financing available
Plus, at Camino, we are more than just a lender. We partner with you and are invested in your financial success! We also offer a car-buying service to members to help you locate the best vehicle for the best price.
Everyone Deserves a Second Chance. Apply for an Auto Loan for Poor Credit Today!
Do you need to purchase a car but feel like your credit makes that impossible? Luckily, there is an auto loan for poor credit available. Take the first step toward a bright financial future with a Second Chance Car Loan. No matter what credit mistakes you may have made in the past, a bright financial future is still on the horizon when you partner with Camino.
Visit our Second Chance Auto Loan Program page to apply today.