5 Tips for Buying a Car
with Bad Credit
a car when you have bad credit isn’t always
easy. Some lenders simply won’t give you the loan you need, even if you now
have a good job and are on your way to repairing your credit score. High debt,
late payments, and vehicle repossessions can make it difficult to buy a new, or
even a used, car. Fortunately, there are a few things you can do to turn things
around and get the vehicle of your dreams, or at least the car you need. Here
are a few tips for buying a car when you have bad credit.
Good-Size Down Payment
you can make a good-size down payment, you may be able to overcome some of the
issues associated with bad credit. Your credit score will be a factor in how
much money you can borrow and what the interest rate will be. If you can’t get
a loan for the amount you need, you may still be able to purchase the vehicle
you want by paying the difference as your down payment. This can also help you
in the long term since you will be borrowing less money. That means you won’t
pay as much interest over the life of the loan.
Have a Budget
of the things that can get you into trouble financially is not knowing what you
can afford. Your damaged credit score may have come from over-extending
yourself, taking on more loans than you could pay for. Before you go car
shopping, sit down and look over your income, bills, and leftover money. Do you
have enough to commit to a monthly car payment? If so, how much can you safely
set aside without impacting your necessary expenses such as food, clothing, rent,
and other things? Even if you really want a certain car, you need to be
realistic and make sure you don’t spend too much. If you do, you may end up
defaulting on yet another loan, damaging your credit even further.
“Two Weeks” Rule
you apply for a new line of credit, no matter what type it is, the lender makes
an inquiry on your credit history. This shows
them all your loans and your credit history. Whenever you do this, it
temporarily lowers your credit score a little bit. It’s not a huge amount, but
it can be the difference between getting a loan and being denied. However, when
applied for an auto loan, generally the credit reporting companies see all
credit inquiries done by auto loan lenders within two weeks as one inquiry.
This means you only take that hit once as long as you don’t go beyond two weeks
from the first inquiry.
means you should do your best to do your car search in a reasonable time. You
can take longer than two weeks to look at cars, but once you get serious and
start applying for loans, do so within a couple of weeks.
Loans Have Less Interest
most cases, going for a three-year loan over a five-year loan does mean you’ll
pay less overall in interest. Some lenders are also more likely to give short-term
to those who have bad credit, especially if you have a down payment. While it
does mean your monthly payment may be a little higher than it would if you had
a longer loan period, it does mean you’ll pay off your car faster. That can be
helpful if you’re trying to pay down other lines of credit. The sooner you pay
off your car loan, the sooner you can devote that money to paying on other
Have a Co-Signer
it may not be ideal, you may need to get a co-signer to get a loan if your
credit is too bad. The co-signer is basically
saying that they take responsibility for the loan if you can’t pay it. This is
a major financial obligation to take on, and many people are very cautious
about co-signing. If you ask someone to co-sign on your loan, you want to be
certain you can make the payments. If you can’t, it will likely destroy any
relationship you have with the co-signer.
are just a few tips for buying a car when you have bad credit. Fortunately,
once you do buy a car and make the payments on time, it will start to
positively impact your credit rating. At Eden Autos, we have
to meet the individual needs of all our customers, regardless of credit scores
and history. No matter what your current financial situation, our dedicated staff
will help you drive home in a quality pre-owned vehicle from our extensive inventory that is right
for you, with affordable financing in place that’s within your budget.