Listen, it happens, in fact, it happens more than you might think. Bad credit has and will always be overcome with discipline. I don't know if you are aware, but there are plenty of people with bad credit who are able to still buy wheels.
In fact, bad credit buyers can enjoy a lot of the same conveniences as buyers with better credit.
Every shopper's position is unique and planning your car-buying process may be the key to achieving your goals. Sometimes we help people who leave their high-quality and trustworthy vehicle with their jaw on the floor. Even so, consider this article your complete guide on how to make the best out of your situation.
1) Be honest with yourself
You should know upfront, customers with bad credit are subject to higher rates than customers with good credit. If you are in the situation where buying a vehicle is a necessity, turn yourself into a determined shopper. How much effort you are willing to put into the process will determine your results.
2) Check your credit to put your best foot forward
The easiest part of research is finding the car you desire. The hardest part of research is finding the car that fits your budget. We are all guilty of having "eyes bigger than our wallets" per say. But, a lot of times people don't give proper merit to the financing rates they are signing up for. This, in the long run, can be exploited by dealers to push you into a vehicle without considering your long-term ability to pay the loan for it.
3) Calculate what you can afford
If you haven't learned by now, being real with yourself about what you can afford takes more than looking in the mirror. These steps should be taken to figure out your realistic price range for a vehicle: 1-Auto Finance calculators are useful tools designed to get an estimate of what you can afford. 2-Now that you've figured out your budget, use our payment calculator to figure if it fits your budget. 3-Combine what you can afford, with what you are willing to spend to get your price. 4-Don't forget to account for sales tax! (Based on country sales tax rate (8-8.75%). 5-Think about what extras you want to add (extended warranties, service contracts and or GAP coverage), if any.
4) Find Your Lender
Credit scores and credit reports If you aren't aware, what's standing between you and the vehicle loan you need, is the lender that chooses you. When considering consumers with bad credits, lenders account for a range of factors. Credit Scores are used by lenders to predict how likely you are to pay back your loan on time. Your Interest Rate is usually determined off your credit score. Higher the credit score, lower the interest rate. APRs Your APR or Annual Percentage Rate includes the interest rate to be charged on the principal loan amount (the sum borrowed to buy a vehicle) and any transaction fees that are rolled into the loan. Together with the loan term, APR will affect the size of your monthly payment as well as how much you pay for the car in total over the life of the loan. Loan Terms Changing the length of payback for your loan will change the monthly rate of your payments. A longer loan term means more time to pay back the loan and a lower monthly rate. A shorter loan term means less time to pay back the loan with a higher monthly rate. Longer payback terms mean there is more time for interest to build. The better the credit the more negotiable loan terms and interest rates are for shoppers.
6) Determine your money down and/or if you're trading in your vehicle
When financing a car with bad credit, a down payment or trading in your current vehicle, or both combined, can help your position. Each can lower the total amount of money you need to borrow via loan, while showing the lender you are committed. Auto Loan Cosigners A cosigner is someone with established credit that is willing to take part ownership of your loan. Sometimes, with bad credit customers, lenders mandate a cosigner. What this is saying is if for some reason you are unable to pay the loan, your cosigner becomes responsible. But, if you are in the position where a cosigner isn't required, it still might help lower your interest rate to have one sign. Make sure you weigh both options if your situation permits. Financing a car after bankruptcy, and with no credit history, If you have been through a bankruptcy, or you have no credit experience, you still tend to have options for getting auto financing. Having a down payment, vehicle to trade in and/or the option of a cosigner will help strengthen your application with lenders.
7) Choosing a vehicle
I hope you notice that there is a reason that a dealership has put "choosing a vehicle" down to step 7. This is because this is the fun and easy part. You have established your budget. You have learned the ins and outs of how loans work while getting your cosigners, trade-ins, and credit ready for application.. so now have fun! Find the vehicle you want, at the price you need.
8) Shop Around For Financing
So now that you have chosen your vehicle (from Certified AutoBrokers.. I mean you kind of owe us after going this far ;) ) you are ready to shop financing rates. The most common lenders to customers with poor credit are banks, credit unions, and finance companies. Luckily, since you've chosen a Certified vehicle, you are in the hands of the best financing department in the industry. We work hard with over 18 banks to shop the best rate possible for you. Seriously... save yourself the trouble and on hold calls and let us do what we do best by getting you approved! Fill out our credit form to get started:
9) Sign and Drive and PAY YOUR LOAN ON TIME
Make this the first and last time you have to read this article. Knowledge is power and at this moment you are a superhero! Pay your loan. Build your credit, and take pride in being what many people aren't, conscious about building their buying power!
One day and purchase at a time...