How to Buy a Car With a Bad Credit Rating

You can purchase a car with a bad credit rating.

Many people do not realize that they can purchase a vehicle even though they have a bad credit rating. Most people think that they will either not be able to obtain financing or that they will be saddled with a very high interest rate. While it is possible to obtain a car loan with a bad credit rating, you'll have to go into the process prepared. And if you educate yourself before shopping, you'll encounter fewer surprises.

Instructions

1. Check your credit report at annualcreditreport.com for free to check your current credit report for any errors. You are able to view and print your credit reports from all three credit reporting agencies -- Experian, Equifax and TransUnion -- on this website. It is a great way to know where your credit really stands.

2. Dispute any errors that you may find on your credit report with the credit reporting agency that the report came from. You can do this by placing a "request to dispute" on the credit reporting agency's website, or you can compose a letter to dispute the error and mail it. Some disputes can take more than 30 days to process, but it may be worth the wait if it raises your credit rating.

3. Save up more money for a larger down payment. The more money you can put down up front the better because you will have less to finance.

4. Find a close friend or family member with better credit who would be willing to co-sign a loan for you. Your chances of obtaining a car loan will increase greatly if you have a co-signer.

5. Read all the terms and conditions of the loan. Some lenders will tack on additional fees, such as a prepayment penalty, that you should be aware of. Make sure that all the terms of the financing are explained to you and that you completely understand them before you sign the loan papers.

Tips & Warnings

• Never drive away from the car dealership with the car until you have secured an agreement on the financing. Some dealerships will let you take a car for the day with the hope that you will fall in love with the vehicle and take on a higher interest rate.

References

• Consumer Affairs: Auto Buying with Bad Credit