Car Financing for Bad Credit
Bad credit can be a burden, and never more so than when you need to finance a car with bad credit. But if you're in a situation where you need a new car right away and youre credit is less than ideal, you do have a variety of options available to you.
1. Consider Bad Credit Repair
If you can put off the purchase of a new or used car for a while, you should first consider doing everything you can to repair your bad credit and improve your current credit ratings and score. If you are not already doing so, you should immediately do everything in your power to repair any damage you have done in the past and make sure all your current bills are up to date.
If you need car financing for very bad credit, you might also consider a credit repair agency. There are many legitimate companies who can help you repair your credit and reduce your current bills. But when considering a credit repair company, be sure to do your research and beware of any scams or shady companies.
2. Prepare for the Loan Application Procedure
If you're satisfied with your current credit situation, feel it can't be improved, or just can't wait any longer for your credit to be repaired, you can start preparing for the car loan application process.
First, you should review your credit score. You can get a free credit report through a link at the FTC website (one free report per year from each of the three consumer credit reporting companies). Be careful of free credit report scams. The link provided by the FTC is the only authorized place to receive a 100% free, no strings attached, credit report.
Why review your credit score? First, there could be errors. Second, you don't want to be surprised when you get the dealership or talk to the loan service you use. You know for a fact they're going to be looking at this information. You should know exactly what they are going to see when they view this report.
3. Determine your Budget
How much money can you afford to pay per month for your new car? You should review your finances and get an idea of what you can afford in monthly payments. A down payment is also very important for car financing for bad credit, with the higher the down payment the better it looks to the loan services.
4. Show you can Afford the Loan
Now that you have determined how much you can afford to pay per month, you need to prepare documentation that you can present to the dealership or loan service. This will help convince them you are able to repay the loan. You should have documents showing proof of employment along with paystubs and other financial information.
5. Prepare for High Interest Rates
There's really no way around it. If you need to finance a car with bad credit, chances are the interest rate is going to be very high, which means you'll be paying much more than the ticket price of the car in the long run.
6. Consider researching Bad Credit Loan Specialists
At this point, you're ready to apply for a loan. You can go directly to the dealership and take your chances. You might also consider researching services that specialize in car financing for bad credit. You can apply for the loan online or in person and have the loan ready to go before you ever set foot in the dealership.
Hundreds of thousands of people finance a car with bad credit everyday, so do not let bad credit be a deterent to getting the car you need, want, or dream of. If you can afford the monthly payments and provide documentation of this, you should have a little problem of getting car financing with bad credit.