You can still buy a car with bad credit. Most of us can’t buy a car cash, but we can use vehicle finance.
Before offering vehicle finance, lenders will look at several factors including your credit score. Buying a car with bad credit is possible, but it will come at a cost.
What are You Working With
The first thing you need to look at before you even go to a dealership is your credit score. Look for any incorrect or fraudulent activity under your name. If you spot any mistakes, dispute these.
You can take steps to improve your bad credit score. The work involved is worth it as it will get you closer to buying a pre-owned or new car.
Turning your credit score around involves:
· Timely payment on bills
· Pay more than the minimum on balances
· Settling small credit balances
· Showing you are responsible
In the time leading up to your car loan application, be responsible. Pay debt and bills on time and avoid adding further credit.
Know the Interest Rates
You will receive a higher interest rate with bad credit, but avoid paying more than you need to. Doing some research and finding the average rates for vehicle finance gives you a good indication. If a lender is offering double that, then be wary.The interest rate you get will determine your affordability.
A Bigger Deposit
The loan you can get will be reduced by your credit history and interest rate. However, making a large deposit can open a larger selection of cars you can buy as the deposit will help to offset the rates.
What You Can Afford
From your budget determine what you have left once your monthly bills are paid. Even if you get approved for more, stick to what you can afford.
Apply for Preapproval
With preapproval, you know what is affordable, making your choice more realistic. Before you head to the dealership, speak with lenders about preapproval.
Don’t Get the Extras
Your loan amount won’t be high when buying a car with bad credit. Avoid adding more to your loan amount by taking extras on the vehicle. Rather make the sacrifice and get the car you can afford instead of increasing the financial burden.
Get a Co-signer
A co-signer with a good credit score could help your chances of getting preapproved plus a better interest rate. However, if you fail to pay then the co-signer becomes responsible, so don’t misuse this trust that a co-signer has put in you.
Read the Small Print
The paperwork can be confusing, so go over it and ensure you understand it. The paperwork should match what the dealer has said verbally. If everything is in order then you can sign and drive off in your new set of wheels.
Buying a car with a bad credit score is possible, even though it will be tougher and more expensive. A bad credit score doesn’t have to be forever and you can turn it around.