You rely on your car to get you from point A to point B reliably. But what happens when it breaks down and you find that you need to replace it fast?
If you have great credit, it’s easy enough to walk into a dealership and buy a new car. But if you’re one of 43.4 million Americans with bad credit, it’s not that simple.
If you need a car now and can’t afford to wait to build your credit up, use these tips to make the buying process easier.
1. Know Your Score When You Need a Car Now
Before you start shopping for a car or looking into financing options, make sure you know your exact credit score.
When you know your number, you’ll know what you can reasonably expect when buying a car. The higher your credit score is, the easier it will be to get financing. And the lower it is, the more you’ll have to look around to find a good deal.
No matter what your credit score is, it’s possible to buy a car. You just have to be patient and willing to keep looking if something doesn’t feel right.
2. Start Paying Down Debts Immediately
If you’ve got bad credit, you likely have outstanding debts that are keeping your score down. So, start paying them down as fast as you can.
Take a look at your credit cards, loans, and any other current debts. Continue making the minimum payments on each one, but do what you can to pay more for the debt with the highest interest rate. For most people, this will be a credit card or payday loan.
The more debt you pay off before taking out a car loan, the better your credit score will be. This will help you qualify for a bigger loan and help you buy a nicer car.
3. Set a Budget
Remember, you’ll still need to pay down your existing debts once you buy a new car. Those costs won’t go away. But taking out a large loan can make it hard to keep paying your debts down.
Think about what you can realistically afford to pay towards a car each month. Use an auto loan calculator to estimate how much the car (and the loan) will cost you.
Use that calculation to start browsing for cars that fit your budget. Take care not to look at cars that are more expensive than you can afford. The last thing you want to do is take on more debt than necessary.
This will only lower your credit score further.
4. Look for Dealers That Specialize in Low Credit Sales
Heading to the biggest new car dealership isn’t always an option when you have bad credit.
According to Buy Here Pay Here Local, it’s in your best interest to find dealerships that work with buyers on any end of the credit spectrum. Otherwise, you could get denied financing and may struggle to find the right car for your needs.
If dealerships typically with people with low credit scores, they’ll be more willing to help you find financing. And they’ll be better equipped to help you stick to your budget.
5. Offer a Larger Down Payment on the Car
The more you can pay towards the car in cash, the less you’ll have to borrow to finance the rest of the purchase. If possible, pay a larger down payment for your car.
If you need to, take a few months to start saving money towards the down payment. There will always be cars that will fit your budget. But the more you can pay in cash, the better your monthly budget will be.
6. Explore Your Financing Options
Many car dealerships offer in-house financing. But that doesn’t mean you should settle for the offers they give you. In fact, doing so can force you to pay higher interest rates than you otherwise would.
Think of it this way: if a dealership isn’t used to working with low credit score borrowers, they may not have the best options on hand for your budget. They’ll judge your finances the same way they would the rest of their customers.
And since the other customers likely have higher credit scores, you’ll end up qualifying for a lower loan amount at a much higher interest rate.
Instead, start looking at your financing options before you start looking at cars.
Speak with your local bank, private lenders, and dealerships to see what you might qualify for. You can even get pre-qualified for an auto loan, making it easier to buy the right car as soon as you find it.
7. Buy a Car You’re Happy With
When you buy a brand new car, the expectation is that you’ll want to trade it for a new model in a few years. But when you’re buying a car with a low credit score, you probably won’t have that option.
If you trade the car in, the price of your old loan gets added to the cost of your new car. This puts you more in debt and lowers your credit score further.
Instead, choose a model you’re willing to drive for a long time. This way, you’ll be able to pay back the loan and boost your credit score in the process.
Just remember that bad credit makes it harder to qualify for higher loan amounts. Be prepared to buy a car that’s functional rather than one that has all the features you could ever imagine.
Don’t Let Bad Credit Keep You From Driving
When you need a car now, it’s tempting to rush through the buying process. Take your time and use these tips to help you get the right car for your needs and your budget.
Remember, bad credit doesn’t mean you won’t be able to get a car. It just means you’ll need to be smart about the car-buying process.