What You Need to Know About Buying a Car with Bad Credit
A lot of people these days don’t realize that they have bad credit scores and if they do know they know that it makes getting the things that they want more difficult. This is why many people with low credit scores prefer trying their luck at buying a car with bad credit. There are many methods as to how you can buy a car with bad credit. Keep on reading to learn more about ways you can get a car.
How Do I Know What if My Credit Score Is Low?
One of the first things that you should do is to look at your credit situation before trying to buy a car. Check your credit report to know exactly what your score is. This will allow you to see what you ought to do if you want to make it higher or if you can apply for loans without worrying about your score too much.
Should I Try Leasing a Car With Bad Credit?
For many people, leasing a car because of their bad credit has been a popular option. However, it can come with a lot of downsides and depending on what situation you are in, potentially more cons than pros. Leasing a car means that you will be paying to rent a portion of a vehicle for a certain amount of time and once that time is up, you will have to return the car.
Leasing a car can be tempting because it often comes with low monthly payments. However, interest rates can quickly turn those into costly payments. Along with that, if you lease a car for three years, you might end up paying for more than what it is even worth and you’ll have to return it in the end. So, depending on your situation (i.e., income, need for a vehicle, etc.) it will vary on whether or not you should lease a car.
Should I Try to Get A Car Loan?
Another way you can try buying a car with bad credit is to apply for a car loan. A car loan is when you go to an auto finance lender or any other form of lenders such as a bank to ask to borrow money to buy a car. Car loans can be a better choice for people, with or without bad credit, who want to get a car because you own the vehicle once the loan is paid off, whereas a lease would require you to return the vehicle.
However, because your credit score is low, you may have a significantly harder time trying to get approved for one. Thankfully, there are many ways you can get around that issue. Here are some ideas you can get approved for a car loan quickly.
Choose Affordable Cars.
It is crucial that you choose an inexpensive car if you are trying to apply for a loan with bad credit. Even if your income and savings say that you can afford to buy an expensive car, you should always try to choose an affordable one. A lot of lenders might not want to approve you for a car loan because they’ll think that you might not be able to pay for it based on your bad credit. If you want to have a higher chance of getting approved, make sure that you are choosing cheaper cars when you apply for car loans.
Pay What You Owe.
Another good way to try increasing your chances of getting approved for a car loan is in attempting to raise your credit rating. Your credit score may not be a good one but if you build it, but it will be better than before. One method that you can try to raise, or keep from getting any lower, it is by paying off all of your credit card debt. By clearing it out, you might be able to raise your credit score a little bit, and lenders will be happy to know that you don’t have to pay for a lot of things and can focus on paying off your loan.
Be On Time.
Another crucial tip to raising your credit score is to avoid being late to pay for any of your bills or dues. This can reflect poorly on your credit report, especially if you consecutively miss payments or don’t pay in full. Try to create a calendar of when your bills are due and write down how much they cost. That way, you will know when you have to pay for them and how much money you should put aside from your income.
Choose a Reputable Lender.
Be wary of the loan scams that you might be reading about. They try to take advantage of the fact that you have bad credit and will make you think that borrowing money from them is the only way that you can buy a car. However, that is far from the truth because you can still try to apply to well-known lenders and banks. You have to push a little harder to get approved by them.
When choosing a lender, you can try finding lenders that say they cater to people with bad credit scores. They will be more likely to approve your loan rather than traditional lenders. However, keep in mind that you should still compare lenders before accepting a loan offer. They might fool you by approving you then giving large interest rates on your monthly payment bills, so be sure you know exactly what you are going to get and what you have to give when someone approves you.
A Helping Hand.
Another popular and effective way to get approved for a car loan is by asking a relative or good family friend with an excellent credit score to be a co-signer with you. If they agree, you instantly look better to lenders because they know that someone else will pay them back if you are not able to. Just be sure that you are entirely ready to pay what you owe, that way you won’t risk a relationship with a friend or relative and it will also help ensure that you will get the car because they will have as many rights to the car as you do just by being a co-signer.
Always Double Check.
Let’s say that you are bouncing up and down for joy because a good lender has approved you for a car loan. Now, don’t go signing the contract that they are handing to you just yet. The deal might sound too good to be true, so you need to make sure that all the things that you have agreed upon are true. You need more than just word of mouth; you need to read all of the papers like contracts and other legal documents. This will ensure that you are not getting toyed with and this will help understand exactly what you thought you were going to get and deserve.
Don’t let your bad credit crush your dreams of having your very own car. You can try buying a car with bad credit as long as you know what you are getting into and by listening to the advice written above.