For most Americans, owning a car is non-negotiable. While public transportation might be available, being able to provide our own is seen as a rite of passage and a sign of independence. Unfortunately, the process of buying a vehicle may not be simple if you have imperfect credit.
Although Credit.com estimates that approximately 30% of Americans have poor or bad credit (with millions of others having no credit at all), it’s still difficult for Americans with low credit scores to gain access to vehicle ownership. However, it’s not impossible to buy a car if your credit score isn’t as high as you’d hoped. The following dos and don’ts can help if you find yourself in this type of situation.
- Focus on Used Cars: This might go without saying, but you’re going to get a much better deal — and be more likely to secure financing — when buying pre owned vehicles. While a brand new car might sound great, it’s going to cost far more. And the likelihood of finding a dealership or lender willing to give an auto loan for a new car to someone with poor credit is fairly low. Ultimately, choosing a used car will be better for your finances, too. Keep in mind that newer models of used cars will often have better financing options and will need fewer repairs than older models.
- Visit Buy Here Pay Here Used Car Lots: While there were roughly 40 million sales of used vehicles in the U.S. during 2018, there are many ways to get your hands on a pre owned car. If you have poor credit, a “buy here pay here” dealership specifically provides in-house financing solutions for customers just like you. You can begin and complete the entire car-buying process on the lot, meaning you won’t have to wait to hear back from lenders or worry about being rejected for having poor credit. You’ll be able to drive home in your vehicle more quickly and can remove common barriers that motorists with credit issues often face.
- Overlook the Total Cost: When buying any kind of vehicle, it’s easy to focus only on the monthly payment you’ll make on your car loan. But you also need to remember the costs of insurance, maintenance, and gas. These can add up quickly, particularly on an older vehicle. You’ll want to make sure your monthly car loan payment is feasible enough that you can pay for those other expenditures without financial hardship. You’ll also need to be able to come up with a down payment. You may need to shop around or even take time to save up additional funds in order to feel confident in your purchase.
- Ignore the Terms of Your Loan: You might be inclined to get caught up in the excitement of buying a new vehicle — so much so that you don’t pay enough attention to your car loan terms. If you opt for a longer loan, you’ll have lower monthly payments. However, your interest rate may be higher. If you are able to go for a shorter-term loan, you may be responsible for higher monthly payments but will actually end up paying less for your car in the end. You’ll have to determine whether this option is feasible for your finances, of course, but being able to pay your loan off more quickly will provide you with more freedom. Just make sure you understand the terms of your loan before making a final decision.
When it comes time to buy a used car with poor credit, you might feel overwhelmed or even disheartened. Rest assured that it isn’t impossible to secure a vehicle with bad credit. And if you keep these dos and don’ts in mind, you’ll have a much easier time finding the right vehicle for what you can afford. For more information on how we can help get you started, please contact us today.
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