Car Finance

Simple Things You Can Do to Improve Your Car Financing Chances

By Mike Richards Updated: 09/11/2023 Posted: 04/02/2018

Perhaps you are just recovering from a bad credit score. But you still carry the aftertaste of too many car loan applications being declined by nearly every lender you approached.

You can still remember the last words from the lender you last approached: “You need to work on your credit score to improve your chances of getting car financing”. As you walked away from this lender’s office, you vowed to come back, but with an impressive credit score.

Very few lenders are willing to provide loans to people with poor credit scores. Those that do end up punishing borrowers with very high interest rates and prohibitive fees.

There are, however, a number of things you can do to improve your chances of getting car financing; and each of these has to do with improving your credit score.

If you are coming from a severely-dented credit score, the journey towards recovery will be arduous, but worth the effort. To recover from a bad credit score and improve your chances of securing a car loan in future, there are a number of things you will need to stop doing.

Stop Taking On More Loans

As the saying goes, if you find yourself in a hole, the first thing you need to do is to stop digging. Taking on new loans when your credit score is in the red will only hurt you more. A bad credit pull report will stay on record for at least two years. If during the two years you are still busy trying to get new loans, your credit score may never recover. Taking a loan on bad credit is like insisting to play basketball with a severe knee injury. You will only hurt yourself some more.

Don’t Go On A Credit Card Spending Spree

When all financing doors are shut, most people are tempted to use their credit cards at every turn. Despite the temporary solution that credit cards provide, uncontrolled spending with credit cards is one sure way of hurting your credit score further. Those balances on your credit card payments will soon come to haunt you if you do not pay them regularly. If there is a time to go easy on your credit card, it is during times of bad credit. The lenders declined your loan application for a reason. Take their advice and only use your credit card when it’s absolutely necessary.

Now that we have seen a few things you need to stop doing so as to improve your financing chances when looking for a vehicle to buy, let’s now look at what you should start doing, immediately!

1. Pay Your Bills On Time, Every Time

To make sure that your credit score does not suffer further, you will need to start paying your bills on time. You can’t afford to default on monthly payments because those delinquent monthly payments will come to haunt your credit score very soon. To default on a payment even for just a couple of days could potentially hurt your credit score. To improve your chances of getting car financing, always settle your bills on time.

2. Set Up An Automatic Monthly Payment Schedule

The last thing you want to do is to forget making a payment. To avoid chances of forgetting to make a payment, set up an automatic monthly payment plan. By doing this you will not run the risk of defaulting on payments just because you forgot that a payment is due. Some lenders actually penalize you for late payments. If possible, set up automatic monthly payments that are slightly higher than the minimum payment required. Doing this will continue to chip away at both the premium and the interest.

3. Shop Around For Better Credit And Reduce Your Unsecured Debt

Some credit card deals are very expensive due to the high interests charged. If you have the option of registering for a less-punitive credit card, kindly go ahead and register for one. Besides making sure you have the least expensive credit card, start clearing or reducing your unsecured debts. Unsecured loans usually carry very high-interest rates and fees. You can’t afford to pay more than you should while at the same time trying to get out of debt. It’s like pouring water into a bucket with holes. It can’t hold any water. You need to seal the holes first before pouring in more water.

4. Consider Subprime And Refinancing Lenders

A subprime borrower refers to a person with below-average credit rating (a softer way of saying ‘bad credit’). There are subprime lenders who are less strict on subprime borrowers. These lenders understand your predicament and will not charge more interest than is necessary. Definitely, you will still pay higher interest rates since you are considered a high-risk client; but not too high as to cripple you.

You could also consider approaching a lender to buy off your current loan. Sometimes it makes sense to refinance a loan with a bid to lower its cost. A loan is said to be expensive if the interests and fees charged are too high. Moving to a less expensive lender could make a huge difference in terms of reducing your indebtedness. This could also give you a chance to restructure the loan in order to make the payments more manageable. The only downside is that it could end up hurting your credit score. You will have to weight the benefits of refinancing a loan vis a vis its impact on your credit score.

5. Use A Cosigner With A Better A Credit Score

If you still feel you need a loan, a cosigner with above-average credit score will be very helpful. It helps if this cosigner is a friend or a family member. You will, however, need to understand that the responsibility of paying the loan is yours, not the cosigner’s. A cosigner makes the lender rest easy knowing that should you default, the cosigner guarantees the repayment of the loan. The role of the cosigner is to guarantee the loan and not to pay the loan. Getting a cosigner is, however, not a walk in the park. Not many people are willing to guarantee a loan unless they can vouch for your ability to repay the loan. However, the advantage of using a cosigner is that your credit score does not suffer a further beating.

6. Use Specialist Loan Lenders

When all else fail, and you still need a loan, you can approach a specialist lender. More people and small businesses are today turning to special loan lenders, private equity, and venture capital investors. These specialist lenders could offer you a soft landing away from hurting your credit score. But you need to be very careful not to enter into deals that would sink your further into bad debt and hence hurt your credit score.

7. Work With Credit Scoring Agencies to Improve Your Score

Chances are that your credit reports will be with you for a long time. Lenders have a tendency to conduct hard credit inquiries on you before granting a loan request. Some of these reports may contain inaccuracies that, if corrected, could improve your credit score. While it is important that you read these reports yourself, it’s much better to have a credit scoring agency do it for you. They are the experts and can help you seal any loophole that could potentially plunge you into further bad debt. They could also be very helpful in advising you on the types of loans you can go for without hurting your credit score.


When looking to buy a car, no matter how far into bad debt you have sunk, you can still recover from a severely dented credit score and get into good books with car financing lenders. The journey towards recovery may not be easy, but it’s nonetheless a journey worth taking.

And should you need a loan as you take the credit-score-recovery-journey, there are a number of lending options you can take advantage of without hurting your ratings further. However, as a rule of thumb, always avoid taking loans you will have difficulties paying back.