A close up shows a table with a cup of coffee and pad that says budget.

Bad Credit Car Loans: Budgeting Ideas and Credit Building Tips for You

You’ve purchased a vehicle from a buy here pay here dealership, and you’re wondering what comes next. Your credit is poor, you’re trying to get it established, and the last thing you want to do is screw that up somehow. That’s why we’re here to help. We’ve got several tips and tricks up our sleeves for helping you budget. We’ll provide you with a plan to help you get good credit by the time you buy your next new vehicle.

Pay Your Bill On Time and Budget to Do So

It’s simple, and it’s obvious, but we can’t stress this enough. In order to avoid added interest fees, you want to pay your monthly payment on time. You got this loan because you have enough money to buy the vehicle but not enough credit to prove that. However, we all have months where we fall behind. So the key here is to budget.

You want to start with necessities. So, your bills and groceries. Typically, your bills are going to be about the same every month. The trick here is to make a list of each bill that’s due. Subtract this amount from your monthly income and see what’s left. These bills will include your utilities, your car payment, rent/house payment, and so on. Once you’ve done this, then you know how much you have to spend on groceries.

The main tip here is: don’t only shop at one store! The number of grocery store options you have depends greatly on your location, but pick two of the most affordable locations and compare prices. Yes, this is less convenient and more time-consuming. However, it’s worth the savings. Don’t only compare item prices, but throw coupons into the mix as well. Some grocery stores such as Kroger offer coupons specifically for their store only, so see what discounts are available before deciding between the two store items.

The trick here is to shop both places unless one offers nothing cheaper. If your savings outweigh the fuel cost to get there, purchase from both stores and keep up with how much you’re saving on each grocery trip.

A close up shows a car made of money at a buy here pay here.

How to Cut Unnecessary Expenses

Do you stop at the coffee shop every morning for an iced latte? Do you run through the $10.00 carwash because it’s quicker than washing it at home? These sound like small purchases, but they can add up quickly. Consider cutting the convenience cost and start taking more DIY approaches. A car wash at home is far more affordable. For example, you can buy a bucket of car wash liquid for less than $3.00 at Walmart that will last you several washes, rather than paying $10.00 for one singular wash. Similarly, making your own iced coffees and breakfast wraps will save you lots as well. Make more time, and save more money.

There are two easy ways to avoid needing these early morning conveniences. Either meal prep the night before or set your alarm half an hour earlier, giving you time to make coffee and breakfast on your own. You can also invest in handy devices like an off-brand Keurig. While the upfront cost seems like more, you’ll still be saving in the long run.

Car washes are more time-consuming, however. If you genuinely don’t have the time to hand wash your vehicle, consider using quarter-powered spraying stations instead of drive-thru washes. They’re quicker than hand-washes yet much cheaper than drive-thru options.

How About Fun Money?

Don’t assume that you can’t have any fun at all when you’re budgeting. It is recommended that you use up to 30% of your monthly income for fun activities. Further, you can also plan cost-free and low-cost activities as well and still have fun. Here are a few ideas.

Plan a family game night. Whether you have old board games lying around or you use free phone app games, there are several ways to have fun without spending money on the movies or the mall. Pop some store-brand popcorn, make hot chocolate, and have a movie and game night. Now with new release movies being streamable from home, you can save money on the snacks and condiments by staying home in your footie pajamas and enjoying the movie from your couch.

If the weather is nice, go biking or walking! Parks are free, and if you already own a bicycle, you’re set. Just load it up in your newly purchased vehicle and head out. If not, taking a nature walk can be just as fun and effective.

Plan to spend one weekend going out to eat and shopping, and try to plan your other weekends around your budget-friendly options. When you really start to think about it, you’ll realize how many fun activities are cheap or even free. Fill up your reusable water bottle, brew some at-home coffee, grab a granola bar, and head out!

A close up shows wooden blocks that spell out credit.

Additional Ways to Build Credit

You don’t want to get into debt, but you also need to build credit somehow. One of the best ways to do this in addition to your car loan is by getting a fuel card. We all have to buy fuel unless you own an EV. So, rather than paying cash for your fuel, fill up with your gas card and then pay it off on time. This is a great way to build credit while making sure you don’t overcharge.

For those who have strict self-control, consider getting a store card at a store you visit often. Whether you buy necessities, fun stuff, or both at this store, just be sure to follow your budget. Only spend 30% of your monthly income on fun and 50% on what’s required. Just be sure to include your bills in the 50%, and do the math on what’s left afterward. Pay off your monthly bill in full, and your credit score will thank you.

A final tip is to keep your credit cards open. Don’t open more cards than you can handle because closing them isn’t the ideal option. Just not opening a card you can’t pay for in the first place is best. Once you close a credit card, then its specific line of credit no longer benefits you. This can end up lowering your credit score. Only open credit cards that you plan on using, and don’t overcharge them.

Why Budgeting Makes All the Difference

When you budget, that means you make sure your car payment gets paid first and foremost. When you prioritize your necessities, you never have to worry about being late on major bills. This reflects well on your credit score, and it’ll help you get a much better interest rate the next time you finance a new or used vehicle.

The main thing you want to remember when budgeting is that fun doesn’t have to come at a high cost. Check out local state parks and recreational areas. Plan cute at-home dates, and organize family gatherings where everyone brings their own dish. Pick a new restaurant to visit once a month, and watch movies from home. Most importantly, cut the morning coffee shop visit by making your own coffees each morning. You’ll be surprised by how much you can save once you realize that fun isn’t always expensive!