Bad credit scores can impact almost every aspect of your financial life. If you are in the market to buy a new car, you could be denied financing due to your bad credit score. Your bad credit score could mean that you will have to pay higher interest rates when shopping for a new car. However, there is still hope for people with bad credit to purchase a new car. You can follow our ten easy tips to get the best deals when buying your new car.
Improve Your Credit Score
The first thing you should do before shopping for a new car is to pay out any past dues on your credit card. Makes sure that you don’t have any credit errors and ask your bank how you could remove bad credit information from your overall credit report. [1]
Talk to a Reliable Lender
Some lenders may turn you down for a loan due to your bad credit score. However, there are plenty of lenders out there who are willing to negotiate the terms of a loan, even if you have a bad credit score. [2] Lenders deal with people from all walks of life, so your credits score may not be as bad as you think it is.
Don’t Focus on Monthly Payments
When you are buying a new car, you should always think about the total amount and terms of the loan. Low monthly payments might seem attractive, but they could cost you a fortune in the long run.
Get Pre-Approved by Your Bank
Once you have decided which car you want to buy, contact your bank and try to get pre-approved for a car loan. The pre-approval process will provide more insight into your credit score and how big a loan you can get.
Pay More Upfront
If you make a bigger down payment on your car, you will significantly lower the interest rate, taxes, and services fees regarding your loan.
Choose a Vehicle That’s Right for Your Needs
When issuing a loan credit companies take into account information like mileage, vehicle age, and manufacturer. If you choose a less expensive car, you will likely get a loan faster and easier.
Don’t Be Late on Loan Payments
If you get a car loan, make sure that you keep up with the payments. Making timely payments on your car loan can help improve your credit score.
Get a Consigner on Your Loan
Cosigners are responsible for making payments on your loan in case you fail to make the payments on time. Having someone with a good credit score cosign your loan can greatly improve your chances of getting approved for a car loan. [3]
Don’t Trade-in Your Vehicle
Car dealerships will always try to convince customers to trade-in their car for a newer and more expensive model. If you are already suffering from bad credit, you shouldn’t spend more money than you have on buying a new car.
Contact a Non-Profit Organization
There are non-profit organizations that issue loans to people with financial struggles. Check to see if any non-profit organizations are working in your state, and apply for a loan with them.
1. https://www.thebalance.com/buying-car-bad-credit-960978
2. https://www.bankrate.com/loans/auto-loans/9-steps-to-a-car-loan-on-damaged-credit/
3. https://www.consumeraffairs.com/automotive/buy-car-with-bad-credit.html