How to Get a Car Loan With a Tax Lien on a Credit Report. Getting a car loan can be difficult and time consuming process, especially when there are bumps in your credit history to worry about. If you have a tax lien, there are a few things you need to consider when trying to get a car loan.
Know how tax liens affect your credit report and score. Know that the usual seven-year rule does not apply to tax liens. A tax lien will stay on your credit report and continue to affect your credit score until you pay it.
Find a lender who will work with you. There are many lenders out there who will work with credit challenged people, including those with tax liens. The key factors are going to be how old the tax lien is and whether you have intentions or have made efforts to pay the liens off.
Expect to look for a cheaper car, pay a higher interest rate and/or have a higher down payment or monthly payment. Don't expect to find the most expensive, luxurious or best car out there. Look for a used car with a smaller price tag.
Compare the car loans available to you before you buy. Don't rely on just the dealer to find you the best loan. Talk to your bank or credit union to see if they can offer you a better rate, lower payment or different options.
- Internal Revenue Service. "Understanding a Federal Tax Lien." Accessed Sep. 18, 2020.
- Experian. "Tax Liens Are No Longer a Part of Credit Reports." Accessed Sept. 18, 2020.
- Experian. "What Affects Your Credit Scores?" Accessed Sep. 18, 2020.
- Federal Trade Commission. "Fair Credit Reporting Act 15 U.S.C § 1681," Page 22. Accessed Sep. 18, 2020.
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