Those who have bad credit can often delay buying a car due to the difficulty that can come with securing a loan. Although you may have bad credit, there are still several ways to finance a new or used vehicle that works within your budget. When you are ready for a newer car but haven’t been able to improve your credit score, there are a few important steps to take.
Do Your Research
Although you may become desperate to obtain an auto loan while having a bad credit score, you can still get a deal even if the interest rate is slightly higher. Shop around and inquire at different places close to your home to find the lowest rates that are available.
Get Help from a Friend
Asking a friend or family member to visit the bank or financial institution with you as you apply for a loan will make it easier to have a second opinion with the terms. If you have any questions or become confused, you’ll have someone that you trust to help you with the process to avoid mistakes.
Determine Your Budget
Your budget will ultimately determine the type of car that you can afford to purchase and can make it easier to become approved for a loan. Your auto loan payments should be 10 to 15 percent of your monthly income, according to DMV.org. Although your credit history will influence your interest rate, you can apply for bad credit used car loans that still allow you to obtain manageable rates. You can borrow up to 120 percent of the price of the car and have affordable payments. You’ll also save extra money with relationship benefits and electronic payments that are made each month.
Saving more money for your down payment on the car will also reduce your monthly payment and can make it easy to afford a better model. Make sure to control your expenses before and during the process of securing a loan.
Make it a point to get pre-approved for an auto loan to make it easier to shop for a vehicle. Obtaining the loan ahead of time will avoid stress and can prevent certain types of obstacles or headaches that can arise if you haven’t secured your financing before falling in love with a car.
Secure Your Employment
Many lenders can provide different types of loans for those with poor credit scores or a lack of credit history. You can become approved by proving that you’ll be capable of making the monthly payments on time.
Whether you’re interested in new or old cars, there is a viable financing option for you out there. You just have to work with reputable financial service providers who specialize in bad credit auto loans like Dick’s Auto Loans.
Creating a Car Budget, DMV.org