Exploring Auto Loan Types and Terms

Shopping For A Car With Horrible Credit

If you have bad credit, it is best to focus on improving your credit score before going to purchase a car. However, if it is absolutely essential that you have a car and the only way to afford one is to get a loan, you do have a few options when purchasing a used car.

Look For Inexpensive Cars

First, find out if it is possible that you can pay cash for a car. There are some cars sold by private sellers that are surprisingly inexpensive. By purchasing a car without getting a loan, you will save a lot more money, and there are many cars that are sold for a low price despite being in excellent condition.

Consider That Different Lenders Have Different Criteria

If your credit is borderline bad, some creditors may be willing to be more lenient, seeing the prospect of a loan as an opportunity rather than a risk. Every lender has different criteria, and some lenders are willing to take risks for dealerships that they have long, established relationships with.

Boost Your Credit Score Quickly

When you have a short period of time before you need to purchase a car, there are some ways that you can quickly increase your credit score. For example, since 35% of your credit score is based on making payments on time, simply remembering to make your payments on time will bump your credit score.

Shop For A New Car

Sometimes, purchasing a new car from a dealer is the best option. Dealers see new cars as offering more collateral, and they are more likely to be able to recoup what they loaned by repossesing the car if you default on your payments. Also, those who purchase new cars will be more likely to keep up with their payments because they will not need to make expensive repairs. Dealers also understand that helping out some customers will lead to further sales down the road thanks to word-of-mouth promotions.

Shop Around

Make sure to shop around because the interest rates for those with bad credit can vary much more widely than the interest rates for those who have great credit scores. In many cases, an interest rate can be double for those with poor credit compared with those with great credit. Do not give up hope. You may be surprised at how easily you can drive home with a new car today.

For more advice on how to afford a car when you have bad credit, contact a "buy here, pay here" car lot near you.