Posted on: 25 November 2017
It's never easy to buy a car when your credit is bad. Unfortunately, in this day and age, you just can't survive without a car of your own. If your credit is less than stellar, or it's downright awful, there are still ways to purchase a car. You'll need to work a little harder, but it is possible. Here are four steps you can take to obtain a bad credit auto loan:
Increase the Size of Your Down Payment
When your credit is bad, you may need to jump through additional hoops to obtain a car loan. One of those hoops may include coming up with a larger down payment. Increasing the size of your down payment can serve two useful purposes when trying to qualify for a bad credit auto loan. First, it reduces the total cost of the car you're trying to purchase, which in turn reduces the amount of loan you'll need. Second, a larger down payment lets the loan company know that you have a vested interest in the vehicle you're trying to purchase; that you have more to lose if the car is repossessed.
Do What You Can to Repair Your Credit
Even if your credit is terrible, there are steps you can take to raise your credit score before you try to qualify for a car loan. Paying off a couple of small bills, staying current on payments, or even reducing the balance on your credit cards, will raise your score a couple of points, which may be enough to get you approved for a loan.
Get Pre-Approved Before You Begin Shopping
When it comes to shopping for a car loan, you want as few dings on your credit report as possible. Unfortunately, every time your credit report is run, your score goes down a bit more. That's why it's important that you get pre-approved for a loan before you start car shopping. When you apply for pre-approval, your credit report will be run just once. Once you have your pre-approval, you'll be able to obtain financing based on that.
Buy the Car You Need and Build Up
When you're in need of a car, but your credit is bad, settle for what you can afford. It might not be the car you want, but it will be the car you need. Once you've paid that one off, and built your credit back up, you'll be able to qualify for a better car next time.
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