Buying a Car with Poor Credit

Between pushy salespeople, haggling to get the best price, and trying to avoid buying a lemon, shopping for a new or used car can be frustrating for most anyone. If, however, you are one of the countless individuals with bad credit or no credit who needs financing to buy a car, these problems are probably the least of your concerns. Buying a car with less than perfect credit is no easy task, but there are a few ways to make your experience a little less difficult.

Setting a Realistic Goal

Even if you have the income to afford the payments and insurance on a brand new Lexus, you aren't very likely to get financing for a top-of-the-line vehicle if you don't have great credit. Instead, consider the lowest priced options that will suit your needs. A car that is a couple years older may not be as glamorous, but it's a lot better than riding your bike to work in the rain because you couldn't find a lender to finance your dream car. You need to be realistic in terms of what you should expect to pay as well. While someone with good credit may land an interest rate as low as 3%, someone with bad credit should expect to pay anywhere from 7% to 18%.

Shopping for Cars and Financing

Once you have an idea of what you are looking for and you have a bit of money saved up for a down payment, it's time to start shopping. To make the process a bit easier, you may want to shop for a loan prior to actually visiting a car lot. If you are able to pre-qualify for a loan, it will be easier for you to pick out the perfect vehicle without having to experience the disappointment and frustrating of being rejected. If you can't find a lender that will pre-qualify you, start looking for auto dealers that specialize in helping people with bad credit. Many of these businesses work directly with bad credit financing institutions to make car ownership possible for people regardless of their credit rating.

Avoiding Scams

A sad reality is that there are a lot of people who are looking to make a quick buck on those who have fallen on hard times. Before you apply with a lender you've never heard of, check with the Better Business Bureau to see if they are a reputable business. There are also legitimate car dealers that are notorious for overcharging and making it difficult for customers to pay off their vehicles. While "Buy Here, Pay Here" dealers with guaranteed financing seem like a great way to go, they commonly require a down payment that is very close to what the vehicle is actually worth. They also charge high interest fees, and often the vehicles they sell aren't in great condition. Customers who buy from such places often end up paying way too much for a vehicle that won't even run by the time they are able to pay it off.

Find a few ways to make buying a car with less than perfect credit a little less difficult