Buying a car with bad credit can be intimidating. If there was ever a good example of the phrase, “Knowledge is power,” it’s in taking on the process of buying a used car when your credit is less than perfect.
The first thing you need to know is…
It’s not hopeless.
Your situation doesn’t have to be grim. If you’ve had a good track record paying previous car loans or your financial issues stemmed from uncontrollable events, you may very well be able to finance your vehicle.
In The Great Recession, many people to lost jobs and eventually made less than they once did. Medical bills, divorce and other unforeseen circumstances happen. You’re not alone.
Tip #1: Talk to your dealer first
If you’ve worked with a dealer in the past and have a good relationship, call them first. They’ve already established trust and credibility and won’t steer you wrong.
Tip #2: Work on your credit before you start shopping
By cleaning up your credit before applying for a loan, you improve your chances of being approved with decent terms. Cleaning up your credit will include paying off past due accounts, disputing credit report errors, and adding positive information to your credit report.
Tip #3: Shop for a car loan just as you would if you didn’t have negative marks on your credit report.
When you’ve got bad credit, “you’re likely to agree with just about anything they’ll give you. But you shouldn’t just take the first offer you get,” warns Chris Kukla, senior vice president at the nonprofit Center for Responsible Lending.
Look for ways to save money on a car loan:
- Shorter term
- Factor in all the costs (insurance, gas, parking fees, etc)
- Get 2-3 quotes
- Make additional payments if you can
Tip #4: You’ll need a down payment
A down payment is usually required by lenders, and it’s definitely a good idea.
- It will reduce the amount you’ll need to borrow.
- It improves your chances of loan approval.
- You may get better terms with a down payment.
- It will reduce your monthly payment.
Your credit history will limit the size of the car loan you can get and a high interest rate will make the amount even lower. A down payment will offset the interest, taxes, and fees and widen the selection of vehicles you can choose from.
Tip #5: Yes, you can get Pre-approved
This fast and easy process lets you choose how much you need to borrow based on the type of vehicle you’re looking for.
Used car financing with DYE Autos is easy, click >>>here<<< to get pre-qualified. One of our helpful finance specialists will contact you to discuss any available financing options, including the amount you’re qualified to finance.
Tips #6: Read all the paperwork
Loan documents are confusing. With your money and your credit on the line, it’s important to take time to understand the terms of the loan.
Make sure the paperwork matches what you verbally agreed to.