No Money Down Bad Credit Car Loans Guide
If you have got a bad credit score, then you know that you can’t just walk into a car dealership or a finance company to buy a car or ask for a loan.
Having a bad credit score isn’t as uncommon as you think, because an estimated third of people in the United States of America have bad credit scores. However since it is such a common problem, does that mean all of these people cannot get the things that they want because of it?
In truth, you can still actually get things such as a car loan even if you have a bad credit score. You just have to be a bit more headstrong and know more information about dealing with bad credit.
You can either find ways to get a higher credit score to reach subprime levels which is a patient route. Alternatively, you could find ways to get around your credit score to be able to get what you need. Keep on reading to find out how you can deal with your credit score and get what you deserve.
Try to Get a Car Lease.
One of the most favored options for people with bad credit who need cars is to get a car lease. A car lease is different from getting a car loan.
Basically, a car lease is an agreement where you will pay a fixed amount of money every month and will have the car in your possession until the end of the agreement.
People with bad credit may have a more lenient time when getting a car lease, however it is not guaranteed that they will get approved for it.
If you want to get a car lease, there are some things that you should be aware of first. Firstly, you will not own the car, once the term is up you will have to return it to the person you were leasing from.
Secondly, you might be charged with a really high interest rate because of your bad credit rating. So be careful when it comes to the interest rates, for all you know you could be spending more than what you should.
Do your research on what the interest rates should be before agreeing to the terms. Be wary, you might end up paying for more than what the car is worth.
On the other hand, leasing a car can come with a lot of benefits. If you get a good deal, you will be able to give low monthly payments, just be sure that you aren’t charged with high interest rates to avoid that.
It’s also a good alternative if you just want a car now and want to save up for a better car in the future. Additionally, a lot of these cars are insured, just double check on the terms to see if the one that you want to lease is insured.
Try to Apply for a Car Loan.
If you want to get a car and want to keep it, then your best bet is to try to apply for a car loan. You should be able to find car loans with bad credit no money down, which is a great way to save money because of the fact it has no down payment.
However, you have to keep yourself realistic and not get your hopes too high. Trying to apply for car loans from auto financing lenders may not be as easy because of your bad credit scores.
However just like if you were to apply for a car lease, what you have to be aware of is that a car loan can come with a huge disadvantage.
You might be charged with a very high interest rate because of your current credit rating. However, this doesn’t mean that any low credit score would be charged with extravagant interest rates.
You should check your credit report before agreeing to high interest rates for car loans, that way you will know how much you should be charged and if there was a mistake made in your credit scores that need to be adjusted.
As mentioned earlier, if you have looked in all the car dealerships and prospective auto financing lenders, you might be able to save extra cash by finding deals where you find a no money down car loan.
You can find a lot of these by finding the right places. However, you need to be sure that the people that you are dealing with are reputable and licensed. Otherwise, you might find yourself walking into a scam.
Always Choose Short Monthly Payments.
Now, you might be leaning more towards choosing a plan that would take 6 years to pay off your car loan because it seems like each month would require less money.
However, once you really compare it to a shorter payment plan such as a 3 year one, you will notice a significant difference between the two payment plans.
The shorter payment plan would cost you a lot less in the long run, because you would be paying for less interest whereas the longer term plans would have more months of added interest.
This is one of the best ways to save money when you buy a car.
Go For New Cars.
Surprisingly, you might notice that a lot of used cars would end up being more expensive than getting a car loan for brand new cars.
Since a car loan would mean that you get to own the car once you are able to pay off the loan, you might as well choose a new one, too.
Although you might see a higher amount of interest with the newer choices of cars, you will still end up saving more money in the long run and get your money’s worth by choosing the newer car models.
Try to Raise Your Credit Score.
If you got your credit checked and saw that everything was correct but your score is still low, you should try to raise it before stepping foot in a car dealership.
Sure, your credit score still might be below what would be considered a good credit score, but raising it from the score that it currently is might help in getting approved for car leases and car loans.
One of the most common ways you can try to boost your credit score is by checking out your credit cards. Look at how much balance you have on them and try to set up a plan to help you clear out all of them.
Professionals say that ideally you should have about 30% or less within your balances on your credit cards. This won’t help you raise your credit score in a day, but it will certainly help you out in the long run.
Additionally, it helps you get approved more if they know that you don’t have to pay off any other loans or debt.
This second tip is one that will help you raise your credit score, but should also be created into a habit to avoid lowering your credit score in the future.
You have to make sure that you are paying any bills that you have every month. You should pay for them on time and in the full amount as often as you can, and if possible always.
Missing bills and deadlines can seriously damage your credit score, so be sure to avoid it as much as possible, because lenders and car dealerships will frown upon seeing frequently missed payments.
Just Be Basic with Your Choices.
Car dealers will try to tempt you by offering you extra add ons for your car, such as plush leather seats or a new stereo system. However, what you need to realize is that you need a car, not all of the add ons.
These add ons can cost a lot of money, and if you try to apply for a loan with these add ons included you might get denied because it will become a higher price.
Additionally, you will be paying for more than what you actually need. An auto financing lender will already charge you a high amount of interest for you to be able to buy a car with bad credit.
So, you’ll end up with potentially more interest rates on top of the car and add ons, because the add ons created more interest in the total amount than for what you originally intended to spend.
Just because you have a bad credit score doesn’t mean that you have to fall for any extreme high interest rates just to get a car loan. Be smart and follow the tips above to get the car that you need.