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- Buy a Car with Bad Credit
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Buy a Car with Bad Credit
It’s about time to redefine the “bad” in bad credit loans. This is because it’s really just a matter of opinion and degree, as guided by the numbers on your credit score.
There are some lenders that would read your scores as “workable”, while others would use a slightly different criteria and would read it to be a bit more risky.
The bottom line is, bad credit does not automatically mean that you can’t buy a car. So like everything else, make it a point to shop around before settling down. There are lenders that offer bad credit loans with interest rates ranging from 4%-13%.
Again, you don’t want to develop the “just get me a loan” mentality. Of course, there are still deals that must be made. Below are some suggestions that will work as guidelines for buying a car with bad credit loans.
1. Be educated on your scores
Just because some previous lender told you that you credit score is bad doesn’t mean this new lender will view it the same way too. Always make it a habit to get a copy of your own scores and let each lender take a look at it without injecting your own opinion on the matter. Even if it’s tarnished, there are other factors that can be considered and will make you a better candidate than anyone else.
2. Auto loans vs. mortgage loans
Here’s a fact: vehicles involve less money compared to mortgage loans over a shorter period of time. With that, the credit score that once gave you a subprime mortgage loan might give you better terms when it comes to your auto loans. So go ahead and shoot high in your choice of a lender.
3. Know where to look
According to the DMV, approximately 25% of Americans have bad credit. Despite that number, thousands are still able to get good deals on auto loans. The secret? These people know where to look.
Take advantage of the technology that allows you to access the websites of potential dealerships, submit your applications and possibly get pre-approved. This way, you can narrow down your choices before you look into the fine print.
Lenders will still want to give you a car loan via bad credit loans because one, they know that a car is going to be a great collateral and will have more value should it get repossessed. If you’re buying a new car, your lender will feel more confident because your money will be spent making payments instead of on repairs.
Again, since you will be taking advantage of the bad credit loans, expect a high interest rates. However, not all lenders will impose the same interest rates. There are still others that have better rates than most. Your goal is to look for those lenders. Remember that you are already saddled now with bad credit. If you pick just about any lender, chances are high that you will be doing more harm than good on your credit score. Be smart on your choice.