5 Tips for Buying a Car if You Have Bad Credit
Bad credit happens for a variety of reasons. Maybe you lost your job and got behind on bills. Perhaps you had a medical emergency that you’re still making payments on. No matter the reasons, bad credit can make it harder to get a car, which then makes it more difficult to maintain employment or even run simple errands. Luckily, there are still ways to purchase a vehicle if you have bad credit. Check out these tips for buying a car when you have bad credit.
1. Work on Your Credit First
What many people don’t realize is the best idea is simply to do what you can to fix your credit first. If you don’t need a car right away, consider how you can improve your credit score before you begin shopping for one. Past-due utility bills, old credit card bills, and other negative remarks on your account can drastically lower your score. By paying them off and then showing the proof to the credit reporting agencies, you can raise your score. It is also important to dispute any credit issues that you don’t’ believe are your own.
2. Make a Bigger Down Payment
The biggest problem with bad credit is that it limits the size of the loan you can get because you’re considered a risky investment. If you can save enough money to make a larger down payment, you can combine that with the loan you do receive so that you can handle higher interest and fees as well as choose from a wider selection of vehicles.
3. Seek Out a Flexible Lender
When it does come time to find a lender, search for the ones with the most flexible requirements. Traditional lenders, such as big banks, often shy away from bad credit borrowers, because they see you as less likely to repay your loan. Your best bet is to find car dealerships that offer in-house financing. They have the most flexible credit requirements and often work with people who have bad credit to find a workable solution, especially since their ultimate goal is to sell cars.
4. Find a Car That Fits Your Budget
Sure, that flashy sports car looks amazing, but chances are it isn’t practical for your lifestyle nor your budget. Remember, when you choose an affordable vehicle, you are looking at more affordable loan repayment terms, which means you’re more likely to receive the financing you need. Remember to consider the variables instead of simply looking at the sticker price, too. This includes the sales tax, title and registration fees, and interest on the loan. All of this will determine how much funding you need right away and how large your monthly payments will be.
5. Watch Out for Scams
Unfortunately, people with bad credit are viewed as desperate for financing and more likely to fall for a scam. For this reason, it is very important that you look for the warning signs of an unscrupulous lender when getting a car with bad credit. Get all the facts about the loan, ask plenty of questions, and read the entire contract before signing it. Taking your time ensures you don’t end up in another bad financial situation. Remember, if a lender’s terms seem too good to be true, they probably are. Don’t forget to Google the lender as well. If they are truly unscrupulous, there are likely to be plenty of complaints on the internet.
Luckily, most car dealerships and flexible financers are truly in the job to help people get back on the road and back to business. Chances are you will have an excellent experience as you seek out a new car, even if you have bad credit. Just remember to stick to your budget and pay your loan payment on time each month. Doing so can help you to boost your score for future financial needs.