When it comes to getting a car loan, your credit history plays a major role in how much you can get financing for as well as the interest rate that you will qualify for.
For consumers with bad credit, the focus can quickly shift from finding the right car to simply getting the loan approval.
Bad credit doesn’t have to stand in your way, you’ll just have to shop a little differently. Here are four suggestions for navigating the car buying process when you have bad credit:
1. Find A Dealer with Good Financing Options
With bad credit, finding a lender can be the most difficult part of buying a car. Dealers who work with reputable banks can often get you the best interest rate for financing while also being more flexible with credit requirements.
2. Make A Sizeable Down Payment
Making a sizable down payment for a car, up to 20% of the purchase price, will significantly increase your chance of getting a loan.
Because the lenders will be risking less money, they will be more accepting of your bad credit score.
3. Consider A Used Car
Because used cars are less expensive, you need to borrow less money, which makes it easier to get approved for a loan. Used cars can also get you much more value for every dollar you spend.
Used car dealerships work with buyers that have bad credit scores on a regular basis, so they are more open to financing people with bad credit.
4. Get A Cosigner
If you can’t qualify for a car loan on your own, a friend or family member can help you by cosigning your loan.
When someone cosigns your loan, he or she is guaranteeing your payments with their credit score. If the cosigner has good credit, chances are you’ll qualify!
Buying a car with bad credit doesn’t have to be difficult, and these suggestions give you the best chance of qualifying for a car loan. Follow them and you’ll be behind the wheel of a car in no time!