Buying a car with bad credit is a difficult situation and many people go through it. There are many who have a car that is no longer worth repairing and limited financial resources, but need a new vehicle as soon as possible. That is why we have prepared this guide in which we tell you the options you have to get a car financed with bad credit and how to save money on financing.
Buying a car with bad credit: how to achieve it and what you should know
Before we tell you how to buy a car without paying a down payment if you have bad credit , we must warn you that if you already have a considerable debt (that is, if you are in debt with credit cards or medical bills), it will be better for your pocket and financial future than don’t increase it.
How to pay for a car if you have bad credit
It is at this point that those who consider themselves “responsible” people with regards to their finances will tell you that you should have had an emergency fund. Maybe you did, but it ended when you had to take care of your treatment.
Maybe you never had it. Regardless of your case, if it’s any consolation to know (and it probably won’t), you’re definitely not alone. The fact is that you don’t have the money you need, and telling you what you should have done before won’t help you now.
Option #1: Buy a used car and pay for it in cash
One option to buy a car without paying a down payment if you have bad credit is to save enough money to buy it and consider the matter settled. This option can be somewhat complicated, since you would have to find an alternative means of transport while saving money.
Option #2: Ask a friend or family member for a loan
If you don’t have the option of buying a used car and paying for it in cash, maybe you could ask a friend or family member for some money. Asking an acquaintance for money is the worst thing there is, but having someone who understands your situation and can be flexible about payment is a better alternative than risking the car you buy being repossessed.
Option #3: How to find car financing if you have bad credit
In case you have to take out a small loan, try to obtain it from a financial institution with which you have already established a relationship. If possible, it’s best to stay away from dealers that lend you the money directly at the time of purchase, as the idea is to get you a loan that carries the least risk possible.
Of course, no matter how logical the option of buying a used car is, there are people who simply do not want to resort to this alternative, because they feel that buying a new car with a guarantee is the safest option and, although they do not have the groceries money in hand, they have enough income to deal with the car payment.
If you absolutely must buy a new car, you should try to buy the cheapest and most reliable car you can. To do this, try to get a price that is lower than your budget. That is, if your goal is to pay around 300 dollars a month, try to get a car with which you have to pay around 200 dollars. In this way, you will be able to save and you will have something to lean on.
Buying a car with bad credit: Will you be approved?
Now, getting your credit request approved will be a challenge if you don’t have the right credit score for it. In this case, your best option is to have someone with an excellent credit score sign with you.
As we mentioned earlier, asking others for financial help is no fun at all, but if signing up with a third party gives you the ability to get a loan at a lower interest rate, doing so would be a big help. Also, you should be aware that signing a loan with a third party will be a risk for the person with whom you sign it, since, if you do not make your payments on time, your credit score will also be affected.
If you want to buy a car with bad credit, remember that it is inevitable to pay more for financing
Plus, there’s another thing to be aware of: Just because the third party has a good credit score doesn’t mean they’ll automatically get the best rates.
Banks know that when two people sign, the loan usually goes to the one with the lowest score. Typically, they will offer you installments that range from the high interest rates you would receive if you signed up on your own, to the low interest rates that the person with the highest score is eligible for.
You may not have anyone who can sign with you. In that case, investigate and consult your bank, your credit card and your credit union, this way you will know what credit you qualify for before going to the dealer.
Consider buying a used car if you have bad credit
However, despite the opinion that anyone may have about buying a used car, the truth is that buying one can save you a lot of money. By making a purchase of a used car you can acquire an economical and reliable vehicle with which to travel enough miles without spending all your savings.
Buying used cars is a matter of knowing how to manage risks well, and the two best ways to minimize them are:
- Buy a model whose reliability has a good reputation
- Have a trusted mechanic check out the car.
How to get cheap cars
There are a couple of resources that can help you start your search:
- TrueCar : A free website that will only ask for your email. It has thousands of reports on specific vehicles, written by their owners. In general, it is an excellent source to know the opinion of the owners of the car you want to buy.
- Consumer Reports : Probably the most popular source, but it can still be hard to find information on cars made more than eight years ago. In addition, you also need to have a paid subscription to access the information online.
- Kelleys Blue Book – The perfect guide to finding the right price to pay when buying a bad credit used car in your area.
Buying a car with bad credit: Opinions
We hope our guide on how to buy a car with bad credit helps you get all the details you need to know in order to be approved for a bad credit car loan. Remember that, if you have any doubt or question, you can leave us a comment and we will help you solve your concern.