Bad Credit? You Can Still Buy a Car!

Especially during these tough times, there are a lot of people that need reliable transportation and can afford a payment, but are being turned down because of bad credit. More people are losing their homes, getting behind on their payments, or just maxing out credit cards because the money isn’t coming in like it was a short while ago. There are options out there for you there are just a few things you need to keep in mind. This is in no way a complete list, just a few tips that will help you get the the mess that is financing a car in the current credit market.

1. Down payment matters. Not only does down payment go a long way in keeping your payment affordable, it lowers the amount financed which makes banks more likely to consider your loan. If they have a $20,000 car, and are financing $22,000 (after tax and DMV fees) that doesn’t look very good to them. Put a $5000 down payment in there and all of a sudden the bank sees just a $17,000 loan on a $20,000 car, that looks much better to them.

2. Debt: If you’ve never made a late payment in your life that’s great, but there are a lot of us right now who have zero late payments, but our bills are 70, 80 even 90% of our monthly income. Banks are paying special attention to this now. Don’t expect more than what you can realistically afford without stretching.

3. Credit Score: Now this is a multi-post topic itself but if you had a 600 credit score 2 or 3 years ago, banks will look at it like they did a 500 score then. Banks are tightening up, so know what you are walking into. Dealerships want to sell you a car, so even if you don’t have great credit they will do everything they can. You do need to be prepared though. Check a couple credit unions or banks (capitol one, etc.) and see what they have to offer. DO NOT just check with a bunch of dealerships. 3 dealership visits can equal anywhere from 3-15 inquiries on your credit, which will lower your score even more.