You can buy a car with bad credit if you know a few rules and you are willing to do some work to find the best loans. One thing you don’t want to do is just accept the financing the car dealer offers you. This may be the best you can get but in general you can do better by shopping around. Usually, your best option if you want to buy a used car with bad credit is to get pre-approved for a loan before you even step foot on the lot. Many car financiers which are associated with car lots will actually increase the credit rate you need to pay and then give the dealer a kick back because they will make more off of you.
Pre-approved financing is very easy to understand. Basically, you go around to a few banks and other finance institutions and fill out an application for a loan. The bank will then tell you whether you qualify for a loan and how much it is. I would suggest getting a copy of your credit score before you make the rounds so you know how bad your credit is. A score under 580 will make it more difficult to find financing.
You can access a copy of your credit report for free online. You get one copy per year free of charge. If you visit this site you will get a free credit report and you will not be charged. www.AnnualCreditReport.com Many websites claim to offer free credit reports but then they make you buy a product or service in order to get it. The credit report will show you all the information about loans that you currently have or have had in the past and the status of those loans. That is, whether the loan payments were late or whether you defaulted on the loan. This is good information but it is not the same as a credit score. Your credit score is a number which takes into account all this information. If you are buying a car with bad credit then it will be worth your while to spend the extra $7.95 or so it costs to get the score.
Another reason to get your credit score is so you have a copy with you when you go talk to a loan officer. They will have to get a copy of the report themselves before they will close on a loan but often times they can tell you whether or not you will be able to qualify by looking at your score. Tentative to any other information they find. If you will not qualify with your score then you want to know before they request a copy of your report. The credit reporting agencies keep records of every time someone requests credit information and if you get too many requests this can also affect your score negatively.
One method that answers the question of how to buy a car with bad credit is to get a co-signer. A person who co-signs a loan is someone who will guarantee you make the payments and has a good credit score which you basically piggyback on. Be very careful if you go this route because many more than one friendship has been ruined by a person not making the payments on a loan and sticking the co-signer with the bill so to speak. If you ever get into a situation where you are asked to co-sign for someone be very careful about putting your name on the dotted line.
Buying a new car with bad credit is often times easier than buying a used car because if the car companies are trying to increase their sales they will often times subsidize the loan in order to move units. They may also allow people who are more of a credit risk to get a loan so they can sell more cars. This is especially true at the end of a quarter.
More than likely, unless you can get into a new car program, you will not be able to buy a car with bad credit and no money down. A down payment is used for two things. First, if you put money into the car above a loan amount then the thinking is that you will be more likely to make the remainder of the payments because you don’t want to lose your initial investment. The down payment can also be used to lower your payments and thus make it more likely you will be able to qualify for a loan. One criteria for a loan is to percentage of payment to your take home pay and expenses. If you pay a down payment then you will be financing less so your monthly cost will be less and you will be more likely to qualify.
If you have bad credit then it is harder to get a car loan but you can still do it. If you want to buy a car, bad credit does not have to be the end of the game. There are many places you can go to find financing but it will probably take some work on your part. It will also require that you learn about how credits and loans work but this would be a great thing to know. One key to success in life is to be able to use credit effectively to get what you want without being taken advantage of or digging a hole you can’t get out of. Both of these represent the bad side of credit but there is a good side. Many people are able to enjoy the things they enjoy in life by utilizing credit effectively and efficiently but not going over board with it.
One question to always ask yourself is why to you want to buy car. Bad credit may be a sign that you are trying to overreach and you are trading material goods for your true self-worth. Do you want a car to feel good? Will it give you status? Will it allow you to project an image you want to project? These are all possibilities and they are OK as long as you understand what they are.
But maybe trying to buy a car with bad credit is not really what you should be doing now. Maybe you should work on repairing your credit first.