Low on credit but need to buy a car?
While buyers with poor credit are often victims of all kinds of scams — from yo-yo financing to mandatory warranties — there are legitimate ways to get a good deal on a car when your credit is less than stellar.
Keep reading for a few quick tips on how to buy a car with bad credit.
1. Give Your Credit Some Love
Before you even think about makes and models or dealers you’d like to visit, take a look at your credit. Try to pay off anything you can and clean up accounts that might be giving you trouble.
2. Do Your Homework
Never show up at a car dealer unprepared. Do your homework and know the type of vehicle you’re interested in and common problems to watch out for.
3. Know What You Can Afford (and Stick to It)
Don’t step onto a dealer’s lot until you know exactly how much you can afford. Set aside money for a down payment and clearly define your optimal monthly payment.
4. Get Approved Before You Go
The best way to get a car loan is to get approved before looking at a car. Most car dealer’s only have a few lenders they work with, and will always work to tip the financing in their favor. It is important to learn how to get a car loan because they are very different from personal loans.
5. Explore All Your Options
Traditional car financing isn’t always the answer. Many states offer lending programs for low-income buyers or those with poor credit. New services like Canvas are also giving drivers another alternative to traditional ownership or leasing.
6. Put More Down
The bigger your down payment, the better the lending options. If you can put a little more down — go for it.
7. To Buy a Car With Bad Credit: Keep It Simple
If your credit isn’t so hot, try to limit your purchase to a more basic car. Buy a reliable, functional vehicle now and think about getting something nicer once you’ve paid it off and improved your credit.
8. Skip the Buy Here, Pay Here Lots
Unless you absolutely have to, it’s best to avoid the “buy here, pay here” dealers. While they will approve low credit buyers, interest rates are usually sky high and vehicle prices are greatly inflated.
9. Read the Fine Print
Before you sign for any type of financing, make sure you read and understand the entire agreement. Don’t agree to something that’s just going to put you in a worse financial position.
10. Stick With What You Get
Don’t buy a car thinking you’ll just trade it in a year. Trading in a vehicle when you still owe money on it is almost always a bad idea.
11. Stay Vigilant
Be wary of scams and predatory practices. Low credit buyers are, sadly, the target of many scams. If it sounds sketchy or too good to be true, it probably is.
If you’re trying to buy a car with bad credit, be careful. Keep your eyes open and be on the lookout for predatory practices.
Learn more about getting a loan when you have bad credit.
Here are some other articles that you might enjoy:
Poor Credit Payday Loans Online: Do They Exist?
Knowing Where to Look: Who Does Payday Loans?
Financial Limits: How Many Payday Loans Can You Have?
9 Personal Questions to Ask Before You Take Out a Personal Loan