Owning a car is not a luxury: it’s a necessity, because driving everywhere that you need to be is commonplace in the modern world we are living in. Having a car is, however, a very costly necessity! Not many are able to afford the cost of a new vehicle – and when you have a bad credit, buying a car, even a used one, may seem completely out of reach!
If your credit is less than perfect, you are certainly not completely without options! But, it can be a hassle to get car financing with bad credit: most traditional lenders and banks will not be willing to lend you money. Having a damaged credit means that you will have to shop around – possibly a lot!
The down payment you are expected to make got you down? Well, before applying for a loan, you need to be clear on how much can you afford to pay monthly. Applying for a loan that you can’t really afford will only damage your credit further.
But first, get a free copy of your credit report from TransUnion, Equifax and Experian. Verify that there has not been a mistake that incorrectly lowered your credit score. If you can, try to improve it before you apply for a car loan.
If your score is above six hundred, most used car dealerships will not have problems working with you. The same goes if you are able to get a cosigner with excellent credit.
If that is not an option for you, it is best to find a used car dealership which specializes in bad credit financing. However, do not apply to more than a single car dealership at a time, because multiple credit inquiries can further lower your score.
If you have an account at credit union, you can also try there: they are often more lenient in regard to their members than other banks. You can try an online search for sub-prime lenders and see what they offer as well. If your credit score is borderline, you can still be considered not too high of a risk for some lenders.
Don’t forget how easy it is to get your car repossessed if you can’t afford to pay your monthly car payment. Before taking a car loan, beside the actual amount of money you will need to pay every month, don’t neglect to factor in your car insurance and maintenance cost as well!