#buying a car with bad credit
wiseGEEK: How do I Buy a Car with Bad Credit?
Attempting to buy a car with bad credit can be a daunting task. Fortunately, there are lenders who are willing to work with people who have gone through a rough time and are in the process of rebuilding their damaged credit rating. If you find yourself with a need to get a new car and your credit has taken a beating the last few years, here are some tips to help you buy a car if you have bad credit.
One of the first things you will have to accept is that you are in no position to command the best interest rates for any car loan you attempt to secure. Depending on how much damage was done to your credit, there is a good chance you will have to go for a high risk loan. This type of loan is extended by a creditor who will charge a higher rate of interest in return for taking a chance on someone with less than perfect credit. With that in mind, you still want to get the best interest rate possible even when you buy a car with bad credit.
While you may qualify for high risk car loans on new cars, there is a better chance that you will do better if you consider good quality used cars. Lots where your bad credit is not likely to have the salesperson often post either the full purchase price or at least the amount of the down payment on the windshield of the cars. Look closely for lots that do their own financing, especially those that are willing to work out weekly or monthly payment terms based on how often your receive wages or salary from your job. Buying a car with this type of used car loan will cost a little more, but if obtaining reliable transportation with affordable payments is your focus right now, used car loans of this type may be your best bet.
Keep in mind that these locally owned lots may also be willing to negotiate a little if business has been slow. For example, you may be able to work with them to reduce the amount of the down payment slightly. That can be a big help if you not only have to buy a car with bad credit, but also are limited on how much of a down payment you can make. Remember you still have to buy a tag and obtain insurance for the vehicle, so that discount on the down payment may be the way you cover those expenses.
One thing to keep in mind is that as your credit rating begins to improve, you may be able to refinance the high risk loan for something with lower interest rates. While this is seldom possible with the dealer who allowed you to buy a car with bad credit, other lenders may review your recent credit history toe indicate you are worth the risk. Get the best deal you can at present, but never stop looking for better terms as you regain control of your finances.