How to Finance a Car Despite Bad Credit
If you have bad credit, financing a car is a challenge. Lenders can charge high interest rates and car dealers can stick you with huge monthly payments. Then those high payments and interest rates just end up making your credit even worse. If you need to get a ride, there are ways to finance a car despite your bad credit.
- Difficulty:
- Moderately Challenging
Instructions
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1
Pull your own credit report before you shop for a car. Go to the Equifax, Experian or TrueCredit websites for instant reports. Don't get a report from each as your credit score lowers every time you have your credit checked.
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2
Review your credit report. Any delinquent loans should be paid current before you shop for a car.
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Look at your "Beacon" or "FICO" score at the top of the report. Banks use these scores to rate their potential customers. Basically 600 to 700 is okay but under 600 is bad. If your score is 550 or less, you will have to repair your credit before proceeding.
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4
Save some money for a down payment. The more money down, the better off you will be when buying a car.
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Read up on current interest rates and loans at websites such as CarBuyingTips.com before heading to the car lot. This helps you know what type of rate to expect.
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Take your credit report and visit a few new car dealers. Most dealers have sub-prime credit departments to help people with bad credit buy cars. Show them your report instead of having them pull your credit.
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Choose a car based on affordablity, not on style. You can't be picky when it comes to financing a car with bad credit. The dealer stocks cars that are in your price range and fit the parameters of their loan programs.
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Listen to the salesperson or manager when he or she discusses the details of your auto loan. Expect to pay a higher interest rate due to your credit problems but, since you did your homework, you'll be aware if you're being offered a ridiculously high interest rate.
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Keep your car as long as you can once you've been financed. Pay the loan payments on time for the life of the loan and then you can be picky about your next car!
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Comments
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Question... is it better for me to get financing through my credit union THEN go buy a car or should I have the dealer "shop" for a loan?
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depnomore
May 06, 2009
I have read that if you take the creditor's statement with all the valid information and the balance as being paid, you won't have to wait for the lazy credit reporting agencies.Good Luck!! -
Dawn Adkins
May 02, 2009
Looks like we have allot of credit experts here but maby I can add a bit more to what these good people are trying to saying. You are all right running your credit does have a small adverse affect on credit score But running it one time will not lower your score. And If your out trying to buy car you don't let everyone check your credit just the one that has the car with the bet price. But if you have bad credit it doesn't matter "Who Cares" no one. On bad credit loans its all about equity equity equity The more money down the better and a good job helps. Most sub-prime lenders have set structure for a loan and they will approve anyone that meets their guide lines. Down payment is the key but it means little if the seller has the car price inflated. Whole sale Kelly Blue Book is close to true value so lets use it for an example. Say a car books for 10,000. and you have 2000 down You...
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practicalmagic
Apr 30, 2009
The first step is incorrect. If you yourself are checking your own credit, the score never goes down. You can check your credit 5 times a day everyday and it won't effect it whatsoever. It is only when potential lenders check your credit that it goes down. It doesnt even effect it when employers check it.
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taterbug83
Sep 21, 2008
On the contrary, it does not effect your credit score to look at your own. I have a monthly account with experian and that is listed on their myths about credit list. It does, however, lower your score when the dealer, credit card lender, or other party looks. If you can get away with showing them your credit report, go for it. I have one issue with this eHow. It says "...under 600 is bad. If your score is 550 or less, you will have to repair your credit before proceeding." That leaves 50 points unaccounted for. For example, if one's credit score was 575, can he or she attempt to get a car loan or should they wait?
