It is frustrating to fall in love with a car and then find out that you can’t take it home because you don’t qualify for financing due to bad credit. Bad credit has no specific range. It is a matter of opinion that varies from each moneylender. One moneylender may consider your credit as poor while others will put you in the range of subprime.
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A bad credit does not mean that you can’t ever buy a car. You can even take a new car despite your poor credit standing,as many trusted licensed moneylenders are still willing to approve bad credit car loans. Do not lose hope yet, here are some tips to get your car through a Singapore auto loan even with a poor credit score.
- Check your Credit Score
Moneylenders may have different ways when evaluating a credit score, however to give you an idea, it may range like this:
- Excellent credit: 740 to 850
- Good credit: 680 to 740
- Acceptable credit: 620 to 680
- Subprime credit: 550 to 620
- Poor credit: 300 to 550
To give you a better outlook, you still have a better chance of getting a loan than those having to credit history. If you are decided to get a car, better plan on getting a good auto loan way ahead of shopping for a car. You can get a copy of your credit report from Singapore’s Credit Bureau. The credit report will will contain your personal data (except your contact details), default records (unpaid debts), all credit checks made, credit repayments for the last 12 months, bankruptcy records that will stay in the record for five years, credit accounts, outstanding balances and inquiries.
To get a copy of your credit report, simply contact Credit Bureau (Singapore) Pte Ltd and DP Credit Bureau Pte Ltd. These credit bureaus gazetted are the only bureaus allowed by Monetary Authority of Singapore (MAS) to make copies of your credit report. Once you got your copy, evaluate if it may fall to poor bracket.
There are certain factors that can pull down your credit score.
- Bankruptcy, foreclosure, or defaulting on other loans.
- Late or missed payments.
- Little or no history of credit.
- Too much existing debt.
- Having no assets that serve as collateral (a home or car, etc).
Now that you know what affects your credit score, try to find some mistakes in your credit history and fix them. Your previous moneylenders, if you have some, are the ones who reports your payments. There are times that they may fail to report your on time payments and only report your failure to pay on schedule. If you find some mistakes, contact the credit bureau which provided the data. They will post your dispute on your record to make it clear that it is under investigation, then they will constantly inform you on its progress. Once an amendment has been made, the credit bureau will send the revised copy of your credit report to you and to the people who made enquiries on your record for the past three months.
Take some time to shop around for bad credit auto loans, but be careful with the intervals of your auto loan inquiries. Too much inquiry will pull down your credit score further. Try applying for loan in 14 days, this will come out to your record as a single hard inquiry.
Compare the Annual Percentage Rate (APR) of auto loans instead of looking at its low monthly payment. If you focus on the monthly payments and interest, you will not see the bigger picture that you might be paying more than you could. Do not fall into the trap of making your loan period longer just to have lower monthly interest rates, in the end you will be paying too much interest.
Bring a companion when going to the moneylender’s office. Your companion can act unconvinced or cynical and may ask questions that you may have overlooked. Moneylenders may want to talk you into the highest possible rate they can fetch, your companion can bargain for you if you don’t have the guts.
Once your credit is back in good shape, always keep track on your credit report. Make sure your payments are well recorded to avoid errors. If you can, pay all the monthly payments in full. If you want to pay in full earlier than the loan’s time period, make sure there will be no penalty. Some lenders have prepayment penalties. If you decide to have multiple loans, it will be helpful to have it with only one provider. This way you can easily track your payments and outstanding dues.
Having a bad credit does not mean you say goodbye to having a car. You just have to do more work, but it will pay off in the long run. Once you got a good Singapore auto loan to fit your need and financial standing, ask how much can you spend for a car. Choose your car wisely. Instead of choosing according to style, choose according to your need.
Car loans for people with bad credit is not impossible, take your time to look around. Who knows it may just be a few clicks away.
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