Last Updated on March 22, 2018 by Jason Mason
If you are planning to finance your car with a bad credit, then you will find limited options because many banks and lending institutions only give loans to people with good credits. However, there are several ways of buying a car even if your credit score is low. The steps below will show you how to buy a car with a bad credit.
Rebuild your credit score first
You will need to improve your credit score as much as you can before you visit your bank or lending institution. You will need to order your credit reports and verify that the information on the credit is correct. If the information is not correct, you will need to get the mistakes corrected. Pay past-due and small judgments accounts off. You will need to wait for some few months after cleaning up your credit reports before you present yourself to buy a car on credit.
Set realistic expectations
You will need to set realistic expectations. Cars bought on bad credits don’t come cheaply. Be prepared to pay higher down payments and higher interest rates. You will need to prepare your budget in advance. Make sure you have listed down all your monthly income and expenses. Calculate to see how much you will be remaining with as your monthly payment for the car loan.
Avoid “bad credit specialists”
Once you have known your credit situation and calculated your budget and known how much you are able to set aside for your car, work with mainstream lenders and auto dealers. A good dealer will put you into a high-interest loan if you have a bad credit, but bad-credit specialists will always promise you deals that are destined to fail. If you are dealing with a bad dealer, and you miss one monthly payment, they will be looking to repossess your car.
Explore nonprofit lenders
If you plan to purchase a car with a bad credit, you can also consider loans offered by nonprofit lenders because they come with low-interest rates. For instance, the Capital Good Fund offers car loans for purchases made in specific states. Search to see which nonprofit lenders give car loans to buyers with bad credit.