Less Debt And No Regrets: 7 Ways To Strengthen Your Financial Self And Qualify For An Auto Loan

Qualifying for an auto loan can seem like a complicated maze, especially if your credit is less than stellar. Still, you need a vehicle to get you around, and you don't want to be stuck driving an older, unreliable car, despite the fact that it may be a lot cheaper than a new one. Rather than opting for the high-interest loan you'll probably qualify for with mediocre (or worse) credit, get to work improving your score so you can enjoy the safe and comfortable ride you deserve.

1. Use Credit Cards To Build Credit, Not Increase Debt

A credit card can be very useful in building credit; however, most people use them to incur debt. Sure, you can charge up a storm every month, then keep paying the minimum balance, but that increases your debt-to-earnings-ratio and becomes a heavy financial burden to bear over both the long- and short-term. Make calculated purchases on your credit card, and do so in smart increments, giving yourself time to pay the balance off in full or as close to full as you can get, every month. Lenders will clearly see your ability to control spending and your responsibility to paying what you owe. Incremental purchases accompanied by regular payments will work toward building your credit score on a steady and impressive basis.

2. Manage Every Penny In Your Budget

Put even the pennies you gather to work for you, not just to increase your savings, but also to make you more aware of your financial habits. Knowing how much you spend and where it all goes will help you take control over your finances completely. Write out a budget and allocate money only towards life's necessities. While you're trying to qualify for a practical auto loan, put everything else in savings or towards lowering your debt.

3. Learn To Live With Less

If you're like most people, peer pressure and advertising control a lot of your spending. Having new outfits or the latest tech gadgets, however, isn't going to improve your credit score, nor will such items help you secure an auto loan. While it may be difficult and you may even feel somewhat deprived, making do with what you have, instead of constantly spending more money for new "stuff" is going to put you in the financial position you really want to be in.

4. Talk About Auto Financing Long Before You Apply For A Loan

You have credit issues, but you also have automotive needs. Before you're ready to actually go car shopping, sit down with a finance manager at your local dealership. Explain your concerns and ask for their advice; since you're a serious shopper, they'll spend quality time explaining all the nuances of auto loans, helping you to formulate the most productive strategy moving forward. You should know what to expect and what you need to work towards, along with being fully aware of all of your financing options.

5. Monitor All Your Credit Data

Watch your monthly credit card statements and all other financial data, including your actual credit report, to make sure the information is all accurate and that you're on track to meet your goals. If you're paying too much in fees to your bank, for example, consider moving your money to a no-fee account. Closely scrutinizing all paperwork and other reports about your money will help you understand your credit thoroughly, not to mention show you areas where you can save cash that you weren't likely to think of otherwise.

6. Don't Try To Buy More Car Than You Can Actually Afford

The auto loan you eventually apply for should be more a reflection of your financial situation than your automotive tastes. Even if you could qualify for a higher-end luxury vehicle, your new car must still reflect the financial wisdom you've gained. Be frugal by pinching pennies and not opting for unnecessary accessories and aesthetics and negotiate the lowest possible price for your car. Also, be sure and keep the price of the car a separate issue from your financing. The dealer has room to lower the sticker price, but can then add to their profits by finagling the financing. Find an affordable car at a good price, then shop til you drop for the most desirable terms on an auto loan.

7. Maintain Your Financial Discipline Long After You Secure The Auto Loan

Once you're sitting pretty in your new vehicle, don't disregard all the good habits you developed that put you there in the first place. Keep saving extra cash by living with less, and make sure you use your credit cards to build your good name, rather than tear it down. Always know what's going on with your finances, and don't be above counting pennies. These habits will keep you on track with your auto loan payments and brighten your financial future.

Despite the challenges associated with improving your credit standing, in the long run, you'll be doing yourself a great service. Besides finally qualifying for a respectable auto loan, you'll get your financial house in such good order that you can start taking control of even more things in your life and nothing can beat that feeling.

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