How to Purchase a Car with Bad Credit
If you’ve been trying to purchase a car with bad credit, you know how difficult the process can be. Even if you have a high-paying job and a sizeable down payment, it can often be overshadowed by things like missed payments, high credit balances, bankruptcies, collection accounts, and repossessions. Traditional lenders often label you as high risk and will deny your application or charge you higher than normal interest rates to cover their losses. Though it may take some extra time and effort on your part, there are things you can do to purchase a car despite your bad credit.
Improve Your Credit Score
Many consumers aren’t aware of the negative marks on their credit history that could be causing their credit score to drop. If you review your credit report and see inaccurate or old accounts listed, getting them removed could improve your score within a few weeks. You can also try things like paying down high balances, negotiating settlements, and closing unused accounts to boost your score.
Sell Some Things
The more cash you have to purchase a car, the smaller the loan amount you’ll need to borrow. You can look around your house to see if there are things you no longer need that you could sell. Whether it’s an old smartphone, jewelry, or clothing, you can get a few extra bucks which can be added towards your car fund.
Apply for Special Loan
There are special loans known as bad credit auto loans that you can apply for. These are loans offered by lenders, who in many cases, are willing to assume the responsibility of lending money to a high-risk borrower. The application can be completed online and a decision is generally made within minutes. The loan can then be taken with you and applied to the car of your choice at a dealership.
Ask Someone to Co-Sign
If your credit is horrible, you may be able to get a loan by asking someone else to co-sign on the loan with you. If lenders see that you have someone with better credit willing to vouch for you, they may be inclined to offer you the cash to buy your car. Keep in mind, however, you’ll want to keep up with those payments to avoid messing up the credit of the co-signer.
If all else fails, time is your best option when it comes to purchasing a car with bad credit. Give yourself a few months and try to clear up the negative marks on your credit report and improve your track record. Also, keep adding money to savings to use towards the down payment. With time your score can improve and lenders may be willing to give you a second chance.