A poor credit report is shown next to a calculator.

Bad Credit Checklist: What to do Before You Get to the Dealership

Buying a car is always a big decision that has the potential to get stressful, but when you have bad credit, or no credit history at all, it poses even more of a hassle. There are all kinds of decisions to make, like whether to go to a traditional dealership, find a Buy Here, Pay Here car lot, or work with an individual seller. But going into any of these situations unprepared can be a waste of your precious time. No matter where you’re buying a car, there are some steps you’ll want to take to set yourself up for success.

Today, we’re going to go over some things that you can do before you ever set foot in a dealership. Not only will these things put you in a better financial position, but they’ll also make you feel more prepared, giving you a confidence boost that should come in handy as you wade through the many decisions that are part of the car-buying process. While you may not be able to do everything laid out here, taking even a few steps in the right direction can give you a big leg up.

Check Your Credit Score

Ignorance may be bliss, as the saying goes, but you can’t fix a problem if you don’t know the scale of it. You can access your credit report for free online through Equifax, TransUnion, Experian, or a third-party app (though if you’re going through a third party, you’ll want to make sure that it’s a legitimate institution that you can trust). You may have heard that a credit check can hurt your credit score, but the kind of “hard” check that can impact your score is a very specific inquiry that only takes place when you apply for something like a loan, credit card, or rental application. You personally checking your credit score is a “soft” check that won’t negatively impact the score, but it will give you knowledge that can help you improve it.

One important thing you want to do is check your history for any potential mistakes or fraud. If you’ve been the victim of identity theft or the bad payment history of someone with a similar name has accidentally made its way onto your credit history, then that’s not your fault, and you should be able to contact the credit agency and get it sorted out. If there are no mistakes or fraud, then you can see which areas are hurting your credit score and get a game plan for how to improve it. Improving your credit score isn’t something that you can do quickly, but even if you can’t improve it in time to help you with this car purchase, you can always use this as a motivation to get it in better shape for the next time you need to buy a car.

A couple is shown talking to a salesperson at a buy here pay here car lot.

Contact a Free Credit Counseling Service

If you’re interested in raising your credit score but don’t know where to start, you can get help from a national nonprofit credit counseling agency. These agencies can offer you advice on how to improve your score going forward, but they can also take extra steps like consolidating your payments at reduced interest rates. Working on something as daunting as bad credit on your own can be overwhelming, but with a little guidance, you should be able to turn things around.

See If You Can Find a Cosigner

If you have a family member or friend who has good credit, you can see if they would be willing to cosign on a loan for you. This means that they would take on partial responsibility for the loan. You’ll be putting their credit score on the line, so be sure that you’ll be able to pay off your monthly payments in full and on time every time. Even if having a cosigner isn’t your first choice, it can still be a good idea to know if anyone would be willing to vouch for you before you go into the dealership. That way, if all else fails, you’ll know that you have a Plan B ready to go.

Get a Physical Copy of Your Pay Stub

In this digital world, it’s common to not have a paper paycheck anymore. But in the absence of a good credit score, a dealership will need a different way to prove that you are able to pay back a loan. So make sure to have a copy of your pay stub ready to bring in with you, so that you can show that you have enough income to make your car payments. You may also have to show proof of residence, which you can do by bringing in a copy of your lease or a utility bill that has your name and address printed on it.

Determine What Features You Really Need

Cars today have plenty of available features, from technology like touchscreens with built-in navigation to creature comforts like ventilated seats and heated steering wheels. Walking through a dealership, it’s always tempting to go for a car that’s loaded with nice features, especially when the prospect of a loan makes the cost seem more manageable. But when you already have bad credit, the worst thing you can do is dig yourself deeper into debt. So you want to make absolutely sure that you’ll be able to make your monthly payments in full and on time.

The cheaper your car is, the easier making your payments will be. So get strict with yourself and determine what you really need out of a car instead of what you want. SUVs are very popular in the US, but sedans tend to be cheaper, and if you’re a commuter, you probably don’t need AWD and extra ground clearance. Then again, if you use your pickup truck for work, it may really be necessary to spring for a higher trim level that has a higher towing capacity. Every driver is different, so you’ll need to determine for yourself what’s a must for you. If you know what’s negotiable and what’s a dealbreaker going in, then you’ll have an easier time choosing a vehicle once you get to the dealership.

A person is shown putting coins into a mason jar.

Save Up as Much Money as You Can

Another way that you can make your monthly payments lower is to provide a higher down payment. So save up as much money as you can before you buy a car. Offering a bigger down payment can also help assure the dealership that you’re good for the money and able to afford the car. You may even end up getting a more favorable interest rate, bringing down the overall cost of the loan.

Some Final Thoughts

Once you are all set and ready to buy, make sure you work with a dealership you can trust. A stranger from Craigslist won’t need to see your credit score, but the flipside of that is that you won’t be able to vet them either, and you can’t be sure that they’re not leaving out critical details about the car they’re trying to offload on you. There are many reputable dealerships out there that specialize in helping people with bad credit get behind the wheel of a car that works for them. Once you find one, be clear about your needs, be honest about your budget limitations, and pay attention to the details of any financial agreements you enter into, and you should end up with a quality vehicle that will serve you well for years to come.