Even if you have less than perfect credit, it is still possible to get a car loan. You just need some patience and work ethic to ensure that the rest of your application looks as good as possible.
If you are thinking about buying a new or used car and you know you won’t be able to get standard financing due to bad credit, here’s how to find the best deal for bad credit car finance:
1) Start with local dealerships first. Dealerships know that car financing can be hard for those with bad credit, so they may make every attempt to give you good terms on your loan — even if it means making less money off of your sale.
2) Find out if you can get a co-signer for your loan. A relative or friend with good credit might be willing to sign on as a co-signer on your loan, giving the dealership more confidence that they’ll receive payment from you.
3) Ask about an extended warranty. If you know you won’t be able to qualify for financing due to bad credit, why not ask for extra coverage? You may not need it, but a dealer who is confident that he will get paid for your car may be willing to finance some additional coverage along with your purchase.
4) Find out if there are any local non-profit organizations that work with low-income families and those with bad credit. They may offer assistance in the form of bad credit, bad credit car finance, or discounted financing, which could mean that you’ll get a much better deal on your purchase.
5) Ask about debt consolidation loans. The dealership may be able to help you consolidate all the other debts in your life into one manageable monthly payment if they are confident that when it’s time for monthly payments, you will make them. This last step is an option for high-risk borrowers only, so if you are not sure what this entails, ask before applying!
6) Consider buying a used car. A low-interest rate loan might be hard to come by with bad credit, but there are plenty of great used cars out there that cost less than $25k and have warranty coverage included, especially if you buy from a reputable company such as CarMax.
7) Avoid leasing and buying a car with extremely high mileage. Again, these are not impossible to finance when you have bad credit, but it will be harder to get the terms you want on either of these options. Leasing, in particular, can be very expensive for those with low credit scores due to the high deposit that must be put down in order to lease a vehicle.
8) If you’re having trouble finding financing despite your best efforts, try alternatives such as TitleMax or Payday Loans. These two types of lenders specialize in providing loans for borrowers with poor credit history (or no credit at all) but do so by charging exorbitant interest rates and fees, which make them extremely risky choices.
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