Bad credit history makes it hard to get a wide range of loans approved, but bad credit car loans offer a solution to finance needs and a way to rebuild your credit.
The credit reports collated by agencies like Dun & Bradstreet and Veda Advantage contain the history of loans and other accounts, including payment details, loan applications and defaults.
So when you get a bad credit car loan, every payment you make will be noted on your credit report. If you continue to meet all the payment requirements for your car loan and all other loans or accounts, you will inevitably improve your credit history.
To help you make sure you stay on the right track with your credit history, here are some of the best tips for managing an existing car loan so that you can improve both your credit score and your finances.
1 Get A Copy Of Your Credit History
Credit history is something considered by all lenders but often overlooked by consumers. But looking at your credit report can give you an insight into what lenders may consider when you apply for loans, as well as areas of your finances that can be improved.
It is a good idea to regularly request an updated credit report so that you can see your progress, particularly if you have been diligent with paying off a new bad credit car finance or other financial product.
2 Discuss Options With Your Current Lender
After focusing on improving your credit history for a year or more, the risks faced by a lender should be significantly reduced. Unfortunately, the lower risk may not be reflected in the interest rates and fees that you pay on an existing car loan. If that is the case, one option is to call up your lender and discuss the possibility of changing some of the loan features to reflect how much you have improved your credit history.
While it will be up to the lender to decide whether or not your request is reasonable, asking will show that you are actively engaged with managing and paying off the loan, which could work in your favour.
3 Re-Read The Fine Print
Paying off a car loan becomes part of your financial routine after a while and the terms and conditions end up taken for granted. But the fine print could also hold a key to reducing your current debts more quickly.
For instance, if you have earned a bonus or a raise at work, you might want to make higher repayments or additional payments off your loan. While some car loans allow this free of charge, others may not, so checking what you can and can’t do will help you stay on top of all your options.
Another thing to consider when it comes to terms and conditions is that lenders can change certain features of your loan. Keeping up-to-date with these changes will make it easier to manage the loan and improve your credit history in the process.
Rebuilding credit can be a long and hard process and many people get frustrated or tired before the end is in sight. But staying proactive and learning more about how to make the most of your car finance will help keep you on track with all of your financial goals.
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