Buying a car can be stressful, but if you are currently dealing with bad credit, the car buying process can seem more than stressful, it can seem downright impossible. Luckily, there are car dealerships that can help drivers with poor credit secure bad credit car loans. If you are in need of a car and need help securing a loan for your purchase, finding a quality dealership to help you secure a bad credit car loan can be just the ticket to get you driving the vehicle you need today. Here are a few things to look for when buying a car with bad credit.
Know Your Credit Situation
So how bad is your credit anyway? Knowing your actual credit situation is critical to getting the best and most fair deal when you are looking to secure bad credit car loans. You’ll want to use a credit score company or service that checks and calculates all three of the major credit bureaus when they are calculating your credit score. This will give you the best idea of what banks, dealerships, and credit unions will be looking at when they consider giving you an offer on a car loan.
Another thing to remember when you are trying to secure bad credit car loans is that the actual score will affect things like your monthly payment, how much money you need to put down, and the terms and conditions of your loan. As you can see, there is more to it than simply “bad credit.” Within this term there are many variables that can greatly change what actually happens with your car loan. So, when it’s time to secure financing for your new or new-to-you vehicle, make sure you know as much about your credit situation and personal finances as possible. For a quick and easy reference, here are a few things you’ll want to have answered for yourself before heading to a dealership:
- What is your credit score?
- What kind of negative marks will appear on your credit report?
- What are you able to afford for a monthly car payment?
- What about car insurance?
- Are you going to trade-in a vehicle?
- How much, if any, can you offer as a down payment?
Consider a Cosigner
Many people skip over the idea of getting a cosigner for a car loan. Not only can a co-signer with good credit help you to secure a car loan if you have bad credit, a cosigner with excellent credit can also get you lower monthly payments on the loan you choose or that is available to you in your current credit situation. A co-signer plays a double value role in this bad credit car loan process so it may be beneficial to consider this method with someone who would be comfortable cosigning a car loan for you. This can be an excellent way to secure a lower rate, making paying off your vehicle quicker and easier.
Do A Lot of Research
When you start considering a bad credit car loan you will encounter many dealerships and loan companies who will offer all kinds of promises and offers to try and get you to secure a loan with them. Some of these will be legit and some will not. Be sure to shop around, read the fine print, and make an informed decision before you sign any papers for your car loan.
Check Out The Competition
Don’t just jump at the first car loan that you see where you can get approval. You’ll want to shop around and look at different available loan terms, loan conditions, down-payment options and requirements, length of loan, and more. Shop around to several dealers or loan companies that offer bad credit car loans.
Choose a Reputable Dealer
Once you make up your mind on who you want to buy a used car from and to handle your bad credit car loan, you should check that the dealership you are working with is going to give you all the information you need about the loan you are applying for. Make sure you know all of the terms of the loan and double check that these terms are not only workable with your budget and lifestyle, by that the terms are final. One thing you do not want is to get yourself in a position with variable loan terms that can end up putting you in a position down the road where you become unable to pay and suffer additional consequences such as car repossession and a worse credit score than when you started.
Think About Future Credit
When you secure a bad credit car loan you will most likely be getting a loan with a higher interest rate. In the future you will want to get a better rate. How can drivers get better interest rates on their future car purchases, or when they refinance their original purchase? They can get better interest rates with a better credit score. And one of the greatest advantages of getting a bad credit car loan, aside from the fact that it gets you driving a vehicle that you need, it can also help improve your credit score. How? Loans that report regular on-time payments on a car loan to the three major credit bureaus can help raise your credit score, therefore giving you the opportunity to get a better deal the next time you finance.
Consider Buy Here, Pay Here Car Loans
Buy here pay here loans are a special type of financing for car loans that offer drivers with bad credit the opportunity to secure a car loan and drive a vehicle. These buy here pay here loans are loans that are offered directly through the dealership, rather than through a bank or credit union. The biggest drawback of a buy here pay here loan is the interest rate. Interest rates on buy here pay here car loans can go all the way up to 20%. However, this is sometimes the only option available to drivers with bad credit who really need a vehicle. Of course, as drivers go along, they can pay regularly and on-time and as long as the dealership they are working with reports to the three major credit bureaus, they will have the benefit of their credit score improving. Once their credit score is improved, they can refinance their car in a more traditional way to get a better interest rate, or they can trade their vehicle in and simply make a new purchase at a better interest rate. Either way, Buy here pay here loans can be a viable option for drivers who need to secure a bad credit car loan.
Owning a Car with Bad Credit is Possible
For many drivers who are suffering from the consequences of having bad credit, buying a car can seem out of reach. Thankfully, there are now several options for drivers who need to secure a bad credit car loan. Start researching today, and you will find that there are options for you if you suffer from bad credit. Find a bad credit car loan that suits your terms and you will find yourself driving that vehicle you need and improving your credit sooner than you think.