Don’t Let a Bad Credit Score Stop Your Next Car Purchase — Read This Guide
(USNewsBreak.com) – Your credit score can open or close doors when it comes to your finances. If you need a new car, bad credit can make it tricky to find a good auto loan. However, there are still opportunities to help you get the vehicle you need. Let’s take a look at some of the options.
Considerations Before Shopping
Before you start searching car loan options, you should understand that a low credit score will usually result in higher interest rates. Because of the increase, you will likely pay more than someone with better credit.
To help offset the higher interest, you could put more money down on the purchase, which would lower the amount you must borrow. For this reason, you’ll probably want to estimate how much you’ll need for a down payment ahead of time and start saving up. It’s also a good idea to shop around at multiple dealers and lenders for the best prices and interest rates.
Check your credit report as well. Look for any mistakes or issues and address them. You could end up increasing your score, which can only help as you shop for a loan.
Keep in mind that getting an auto loan will help to build credit in the long run, provided you make your payments on time. Your lender will report your payments to the credit bureaus, which is a positive boost to your credit score.
Multiple online lenders can help you secure a car loan even if you don’t have the best credit score. You may find platforms that allow you to connect with multiple lenders simultaneously, or you may discover lenders that specialize in helping consumers with lower credit scores. For instance, lenders like Auto Credit Express are accustomed to working with people who have bad credit to help them find financing options. Submitting an application through LendingTree is also a great way to find out what kind of financial help you’ll qualify for.
If you find a vehicle you like, the dealership may help you secure a loan. Since the salesperson will be eager to make the sale, he or she will work hard on getting your application approval. Dealerships also have departments that have networks of lenders. If you’re not eager to work directly with a salesperson, you can buy and finance a car online directly through a dealer like CarMax or Carvana.
If a traditional car dealer cannot help you, then consider looking for a “buy here, pay here” lot. These car dealers specialize in providing financing to people who need help. They generally don’t worry much about credit scores. Instead, they base approvals on proof that you have a steady job and make enough to meet the payments.
As long as you have proof of income, you should be able to secure a loan through one of these businesses. Even so, do note this option is also the most expensive. Lenders will typically charge higher prices, interest rates, and fees than other dealers or lenders. The vehicles they offer are usually older with higher mileage, and not every “buy here, pay here” lot will report payments to the credit bureaus.
When trying to buy a car with less-than-perfect credit, your best bet is to shop around. Try out all your options and see who can offer you the most attractive deal for a car loan.
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