You Don't Need The Best Credit In The World To Buy A Car
Here's the short answer: if you've got bad credit, you can finance a car through a loan. It may get complicated. Depending on your level of income and credit, you may have a high interest payment. Barring that, you may have to get a co-signer on the loan, or go through less than usual means. Here we'll explore how you can get a loan with poor credit, and what that's going to look like in the long run.
- Know What Your Credit Scores Are, Learn How To Make Them Better
- See What Sort Of Options Different Auto Loan Groups Offer You
- A Down Payment Can Make The Difference
- Be Sure You Can Afford What You're After
Know What Your Credit Scores Are, Learn How To Make Them Better
First, "credit" doesn't remain static; it's always in flux. If you had excellent credit in 2008, because you took out a loan and paid it off in time, then you took out no loans for ten years, at the end of that ten years your credit score would be "nothing". You would have no credit. The system resets about every seven years. So what your credit score was the last time you checked, and what it is now, are probably not the same thing. Check what your credit score is, then take steps to make that credit better. Start paying bills on time. Experian Boost allows you to add utility bills and phone bills to your credit file, that can help.
See What Sort Of Options Different Auto Loan Groups Offer You
There are auto loan groups who specifically cater to those who don't have the best credit. Here's the catch: you're going to pay higher interest. If you're in a pinch and you've got to get that car, they can definitely help you; but you may pay as much as twice the car's value in interest.
The average interest rate annually in America is 5.47%, or thereabouts. That's going to work out to around $5k interest in 60 months on a $30k loan. If interest is 10%, that's going to be around $10k in the same time. As the loan goes higher, your additional costs do as well. Many car dealerships work with you if you've got bad credit. Subprime lending options allow you to finance these sorts of loans. Sometimes auto dealers will do the footwork for you online. So shop around, but be careful.
A Down Payment Can Make The Difference
If your dealer isn't sure that they want to work with you, having a solid down payment could win them over. The bigger the better. Bring with that down payment some sort of financial history showing you've got enough to pay for the car every month under a financing strategy.
Be Sure You Can Afford What You're After
Know your monthly income. Know the state of your affairs before you buy. Here's your rule of thumb: get a monthly payment quote, and look at your income. If you can't spend the amount of the monthly payment without impacting your quality of life, you might need to look at other vehicle options.
The Car You Love With The Credit You Have
Bad credit isn't necessarily a barrier against finding a loan to pay off your new car. However, it is going to make things complicated, and you'll likely end up paying more in the long run. Down payments, understanding what you can afford, checking your credit, working to improve your credit, and shopping around different auto loan providers can definitely help you find an option that best fits your situation. It may be a bit difficult, but it can be done.