A low credit score can make it a challenge for car buyers to purchase a used car, mainly because interest rates tend to be higher for buyers with low credit rating, thus making the purchase more expensive.
However, this doesn’t mean that you can no longer get that vehicle you’ve been wanting to have. There are steps to take to get reasonable auto loans for bad credit.
Analyze Your Situation
First of all, determine how much you need a car. Avoid making a purchase unless you’re in an emergency situation in which you need the car as your primary mode of transportation, which means that it’s a necessity.
On the other hand, wait at least six months if you’re only buying because you want it. This way, you can rebuild your credit record. Experts suggest that you get a secured card and use it responsibly for six months to one year before you shop for a used car.
Check Your Credit Report
Instead of simply listening to a dealer’s claim about your bad credit, it’s best to get it yourself. You can perform a credit report check for free once every year. Doing this will let you know your situation, helping you determine your best next move.
Also, you should bring your credit report when meeting with a lender to avoid misunderstanding. You can explain the reason for your poor record to the lender, as some may still consider you for a loan depending on your situation.
Choose a Shorter Loan Period
Avoid focusing on the amount of monthly payments, and instead think about the period you need to settle the loan. You might have to pay lower over five years; but when you look at it closely, you may realize that a three-year loan offers the car at a more affordable price. This is because interest rate tends to be higher for longer loan periods. Paying the car faster will also give you more time to settle other debt to improve your credit score.
You don’t have to automatically agree to a high interest rate just because you have poor credit rating. You only need to gather as much information as you can and work with car dealers offering loans for used cars with bad credit that are willing to help you with financing depending on your needs and situation.
How to buy a car with bad credit, ConsumerAffairs.com
How to Buy a Car With Bad Credit in 2017, Credit.com