Car loans can be complicated, especially if you’re not prepared or if you don’t have good credit. Having good credit plays an important part in getting the most favorable terms on your car loan. If you don’t have good credit, not only is it difficult to get a car loan, it is near impossible to get a good one.
However, if you do have less than stellar credit, don’t lose hope. You still may be able to get financing for the vehicle you want. In fact, what you might consider as bad credit may still get you a deal good enough that you still have some funds left over at the end of each month. Here are a few strategies that you can use when you’re looking for a car loan in general and with poor credit.
Strategies to keep in mind when buying a vehicle:
Overcoming poor credit:
If possible, keep driving the car you have while improving your credit score. Make all your payments on time. While you’re waiting use the funds you were planning on using for your new car payments to pay off more of your existing debt, or to…
The larger the down payment you make, the less you must finance. This not only lowers the amount of interest you will pay (regardless of the rate), it may also lower the interest rate since there is less risk for the dealer / financer. Another way to increase your down payment is to…
Since the dealer will be looking to sell your old vehicle, you will, in most cases, be able to receive more funds in a private sale than a dealer will credit you in trade-in value.
This type of dealer usually has on-site financing to offer, often with less stringent qualifications and sometimes without even a credit check. However, many also have a reputation for selling poor-quality, overpriced vehicles and preying on customers with bad credit.
Find out from your bank or credit union what the process is to get pre-approved for a vehicle loan and take those steps. This will save you from wasting time at dealerships looking at cars that you will not be able to purchase at this time.