How to Buy a Car with Bad Credit
If you have a credit score of below 660 on the FICO scale, you are considered a buyer with bad credit.
This means you will have to pay a higher interest rate than those with good credit. Or you may not be approved for a loan by some lenders.
But what can you do if you need to buy a car with bad credit? Read on. We'll tell you everything you need to know about how to buy a car with bad credit.
Have a Large Down Payment
One of the best things you can do when you need to purchase a car with bad credit is to have a large down payment.
Lowering the loan amount that you need, reduces the risk to the lender. That increases your chances of getting a good deal.
Figure Out What You Can Afford
When you purchase a car with bad credit, it's vital to make sure you can afford it. You don't want to tarnish your credit further by being late or missing payments.
Sit down and review your income and spending habits. Remember, it's not just the monthly price you need to think about. Driving a car comes with the cost of gas, maintenance, and insurance.
Financial experts suggest that your car loan should be no more than 10% of your take-home pay. Your total car expenses (including insurance, repairs and loan amount) should be no more than 20%. Otherwise, you could end up in a bad financial situation.
Use an auto loan calculator to figure out how much car you can afford.
Buy A Used Car Instead
Choosing to buy a used car will save you thousands of dollars over the life of the car.
For one thing, used cars don't depreciate as quickly as brand new cars do. Buying a used car with bad credit is often easier than buying a new car because the loan amount is less.
When you choose a factory certified pre-owned car, you save a ton of money. This can be the perfect solution for people with bad credit who need a car.
Find the Right Lender
Buying a car with bad credit can be tricky. Especially if you only shop for financing at a car dealership.
Just because you have bad credit doesn't mean there is no hope. At Auto Loans for All we approve everyone for a car loan. Even if you have low credit.
A pre-approval (sometimes called a soft approval) is done by your lender. They usually run a soft credit check on you to see what you can afford.
This credit check doesn't hurt your credit, however. So don't be worried about getting pre-approved.
You have a better sense of what you can afford once you have been pre-approved. When you know your loan amount, you can car shop confidently and stick to your budget.
Bottom Line on How to Buy a Car with Bad Credit
Thanks for reading. We hope this guide helps you understand your options when you need to buy a car with bad credit.
Remember, just because you have bad credit now, doesn't mean you always will. As you consistently pay your car loan on time, you will build your credit up.
Next, check out these top reasons to buy a used car.
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