Buying a car with bad credit is possible but your choices may be limited. However, if you have enough money for a down payment, buying a car with bad credit should not be that big of a problem.
Allocate enough time for this process. You have bad credit, so you will be visiting a few car dealerships. Decide on a model that will best suit your needs. It is wise to have a variety of choices of cars to choose from. Think about getting a good quality used car; the maintenance would be less of a hassle.
Getting a co-signer is often the right solution. It not only allows you to get the loan at a good interest rate, but also helps you improve your credit score. Keep in mind that if the signer fails to pay the monthly payments, the bank will go after the co-signer. If you are unable to get a co-signer, more than likely you will have to go for a high risk loan option. This type of loan is extended by a creditor who will charge a higher rate of interest in return for taking a chance on someone with less than perfect credit. Car dealerships usually have in-house financing, but you may end up paying a very high interest rate and/or make a high down payment.
- Where to Purchase
Search around for car dealerships that display the down payment on the car already. Usually, the best time for you to purchase will be around the end of the year. Towards the end of the year, car dealers are looking to get rid of their older models to make way for newer models. Banks will also work with you to get you pre-approved but you will be paying a higher interest rate.
Prepare a budget and stay within it. Even though some car dealerships will lower the down payment, it’s important to remember the monthly payments, the down payment, your loan (if pre-approved), insurance and continuous car maintenance.
You will not have much wiggle room here. However, you have researched the finance rate from a loan institution, the price value of the car, the interest rate and the model of the car you wish to purchase. This still gives you the upper hand. You will have the confidence to walk into any dealership and be able to use the little bargaining room you have to try and get the best deal possible.
Check the details of the contract, loan and warranty. Put a line through the things you do not need. This is important because you do not want to end up paying more than you can afford. After you’ve received a price you are comfortable with, inspect your car; check for dents, scratches, etc. If you’re paying for floor mats, make sure they’re added to the car. Once satisfied, give your John Hancock and take your keys. You are ready for the road in your used car.