Do you need to update your transportation but don’t have the best credit? Don’t worry; you can still head to used car dealers and get a reliable vehicle. You just might have to go about shopping a little differently. Take a look at some tips for buying that used car you want, even if you have bad credit.
Check Your Credit
The more information you have, the better, so check your credit score before you start shopping. If you have some time before you need to replace your vehicle, you can work on improving your score before applying for a loan. If you can, pay off past due accounts and add some positive items to your report. You’ll be surprised at how much of a difference it can make.
Consider Your Budget and Adjust if Necessary
If you have poor credit, you might have to rethink your expectations. Used car dealers have a wide variety of used cars at all different price points. Consider a budget-friendly option that still fits all your needs.
You can also save money and lower the amount you need to borrow by keeping the extra features to a minimum. Cloth upholstery instead of leather and a lower trim level instead of the top-of-the-line model will help keep the price down.
Save Up for a Down Payment
If you have credit issues, a down payment can help get you better terms and even help lower your interest rate. Try for 20% of the purchase price if you can, but even 10% will make a difference. Even if you still have to pay a higher interest rate, the larger down payment will offset the extra interest, and it will lower the amount of money you have to borrow.
Get Preapproved
Getting preapproved for a loan before you start shopping will give you an idea of what you have to work with. Start with your bank to get preapproved, but if you can’t get a loan with a traditional bank, used car dealers often have solutions for buyers with poor credit. They can put you in touch with a lender that specializes in bad credit loans. Just make sure to research the lender before signing on the dotted line.
Shop with the Long Term in Mind
When you shop at used car dealers with bad credit, consider cars that will stay on the road for several years. You want time to pay off the loan before getting into a new one. If you trade in a used car before paying it off, you’ll have to roll the rest of your first loan into the new one, which just increases your monthly payment or extends your repayment period.
The good news is that financing a used car, even when you have bad credit, will help improve your credit score. Just make sure to make your payments on time.
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