Buy a car with bad credit
A car is a necessity for most of us. It is difficult to make a
living without having a reliable means of transportation. You
can take the bus or train, but the convenience of a car allows
you to accomplish more in an efficient manner.
People with bad credit, often find it difficult to finance big
name purchases such as homes,
cars, furniture, appliances, etc. Having repossessions,
bankruptcies, charge-offs, liens or judgments on your credit
report identifies you as a credit risk and creditors are likely
to be reserved when, it comes to extending you credit.
These obstacles however should not prevent you from owning what
you need. Yes, it is true that you will probably have to make
your purchase at a higher interest rate than someone with a good
FICO score and you will have to shop around longer to find
reasonable interest rates - but all is doable. If you have bad
credit and your are trying to purchase a car, follow these
guidelines and will drive off the lot in your own car:
Get your credit report
If you suspect that your credit leaves something to be desired,
the first thing you should do, is understand your credit
situation and how creditors view you. The only way to do this,
is to get a copy of your credit report. Get your free credit
report to find out your credit score.
Once you get your credit report, inspect it to ensure that all
details are familiar and that they are no red flags. If you find
any discrepancies, you will want to immediately fix any
errors, as this will probably raise your FICO score and help
you in your quest to purchase a car.
Financing before shopping:
Before you start shopping for a car, shop around for financing.
It is important to do this before you go to the car dealership.
The excitement of test driving a nice car and the sweet tongues
of smooth car salesmen will have you driving off the when you
haven't even secured financing. This is a big mistake because
you should never take possession of a car until everything is in
writing.
Tricky salesmen will sometimes goad you into taking possession
of the car before all contracts and financing are finalized.
Once you have taken possession of the car, they will call you
and tell you that the financing did not go through and then slap
you with a higher interest rate.
You can shop for a loan at larger banks or smaller local banks.
Each of them have their own advantages. A larger bank may have a
whole department totally decided to people with credit issues
and so they will be very familiar with your situation. A smaller
bank is likely to consider a car loan on a loan by loan basis.
Walk into your local bank and sit down with a bank officer and
explain your situation face-to-face. They are more likely to
give you a loan once they understand your predicament. Also a
face-to-face meeting will allow you to explain any discrepancies
on your credit report.
A bank loan is preferred because a bank will not take advantage
of the fact that you have poor credit by raising the price of
the car, giving you a low trade in value or adding unnecessary
extras like credit insurance and extended warranties.
Dealer Financing
If you are not able to secure a bank loan, your only choice is
dealer financing. This is not a bad thing. You can still find a
decent interest rate. The most important thing to remember here
is not to get blinded by the interest rate. Some tricky
dealerships might give you a low interest rate but hike up the
price of the car or give you a low trade in value.