Buying A New Car When Your Credit Is Less Then Perfect
Posted on: 15 December 2021
When you need a car, but your credit is not great, you may need to find alternative ways to finance the vehicle you are considering. Working with a dealership that offers bad credit car financing can help get you the car you need.
Where To Begin
When you need a car but know that your credit is not great, you may want to talk to the finance manager at the local dealership about what they require for financing before you start looking at cars. Having some idea about where your score is can help, and if the dealership has a program for bad credit financing, they will be able to discuss the options with you.
If the dealership feels they can help you, they will often run your credit and determine the amount they can finance for you, then set you up with a salesperson to show you cars that qualify for your loan amount. In some cases, the number of car options may not be huge, but typically there are a few different vehicles to choose from, so picking one that works for your needs may need to be the priority.
The interest rate is typically higher on these loans, but it can be manageable if you work with the finance manager to get the monthly payment where you need it. Bad credit financing is still a loan and will be reported to the credit bureaus, so if you can make your payments on time, you will begin to improve your score throughout the life of the loan.
Personal Loans
Some finance companies offer personal loans to people with less than perfect credit for things like cars. Buying a car using one of these loans can be a good option, and typically the finance company will give you the amount they are willing to finance, then you can start shopping for cars in that price range.
Using an independent finance company for financing is sometimes more straightforward than other methods, but it does not get you out from under the lien on the car for the life of the loan. The vehicle you are buying is often listed on the loan contract, and the finance company will typically secure a lien on the car, so if you default on the loan, they can sell the vehicle to recover the money you owe on it.
Often, the dealerships that offer bad credit car financing are getting the loan for your car through these third-party finance companies, so if you want more options, working directly with the lender can open up the ability to buy from more places.
Non-Traditional Lending
Some dealerships offer bad credit car financing through none traditional methods like buy here, pay here programs, but you need to understand that those programs typically do not help restore your credit. Often the interest rates are so high you will pay more for the car than it is worth at some car lots.
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