How to Purchase a Car With Bad Credit?
If you need a new car, you may be hesitant to try for a loan, because you’re worried about your credit score. While a poor credit score will make getting a loan more difficult, that doesn’t mean you can’t be approved. By following a few of these recommendations, you may be able to get a loan for the car you want.
Take the Time to Improve Your Credit Score
Most people just assume they have bad credit without even looking at a report. Taking the time to look at your credit report can save you frustration, when you are ready to apply for a car loan. When you review your report, be wary of errors and, if you do see anything that doesn’t look right, report it to the credit reporting agency. You should also try to pay off other debts that you do owe, which will be reflected positively on future reports.
Don’t Make Matters Worse
You should be planning ahead for your new car, which gives you time to get your ducks in a row. In addition to repairing your credit, this includes refraining from making additional credit mistakes. Avoid applying for new credit cards and make sure you’re not late on any debt payments. These acts can cause you to be viewed as too big of a risk, even when you’re applying for bad credit loans.
Look for Understanding Dealerships
Many auto dealers are able to offer bad credit loans for people with scores below 500, because they work with multiple lenders. The fact that they maintain good relationships with a number of financial institutions means that they may be able to negotiate a deal for you. It shouldn’t be too hard to locate this type of dealer, since many of them do advertise that they approve credit risks.
If getting a loan is proving more difficult than you expected, it may have something to do with what you’re offering. How much of a down payment are you offering? If all you have to offer is a trade-in, consider delaying your purchase until you can save up a few thousand to add to the pot. Lenders like to see you have the discipline and resources to save money, so offering a down payment can help you get approved for a loan.
Pay More Cash
If getting a loan seems unlikely, or if you prefer to eliminate the monthly payment, you might also consider saving what you need for a new car. Paying cash can help you get your car sooner, especially if your credit is in bad shape. Of course, this depends on your situation. Compare how quickly you can save the money you need for a good used car against how soon you anticipate needing that car. This will help you decide if paying cash is preferable to borrowing.
We all make financial mistakes at least once in our lives, but a series of mistakes can hurt you for years to come. No matter how you plan to pay for your next car, taking the time to repair your credit can help you. It will give you the solid backing you may need in order to recover from a financial emergency, such sudden car trouble. Otherwise, getting a car loan may be difficult and you will likely end up paying high interest rates.
Author Bio: Adrian Rubin is a climate change advocate and freelance writer.