Buy A Car With Bad Credit

There are several things to think about when you want to buy a car with bad credit. The first, biggest, and most important is do you really need that car. Many people get in over their heads with a car purchase and then are never able to extricate themselves from the problem. If you have bad credit, or no credit, ask yourself “does it really make sense to go into debt to buy this car?” If it does make sense to you then that is fine, go ahead and do it but if you have doubts then think about this.

Financial advisers say you should never go in to debt to purchase a luxury. I know, you’re thinking to yourself “but I have to buy this car for transportation.” Well you may need a car but can you get a cheaper one that won’t require such a big loan? Often times you can find a great used car, maybe not the exact make and model you want, for a lot cheaper than that new car you are looking at. So the question becomes one of are you really buying transportation or are you trying to buy status. Going into debt for status is another thing that does not make sense.

If you have a low credit score, under 600, then you can be assured that even if you can get a loan you will be paying a lot more by buying a car with bad credit. It is not uncommon for loan companies to charge 18% interest on these loans. That means if you buy a $20,000 car you will pay about $3600 in interest the first year. That is $300 a month just for the pleasure of driving the car, that is not paying anything for the car itself. Is it really worth it to pay that sleazy car salesman $300 a month for selling you the car and then a few hundred on top of that for the car?

If you want to know how to buy a car with bad credit then you will want to know your credit score before you even go looking for a loan. One of the scams car dealers will use is they will try to charge you more for the loan because your credit score is below 550. But just because they say the score is that low does not mean it is true. Check out one of the free online credit report services, they will try to get you to sign up for a service but you don’t have to. At this point you are only looking for your score. If you know your credit score before hand then this gives you ammunition against the finance guy at the car dealership.

When you get ready to buy a used car with bad credit then you may need a co-signer. This person is someone who does have a good credit rating. Be very careful about asking someone to co-sign for you as they will be responsible for the loan if you default. This is really a bad situation when it is another family member. In fact, families have been broken up over deals like this. A trick that some car dealers will use is they will make you think you are getting the loan with a co-signer but the paperwork will actually be made out as a loan from the other person. This won’t help improve your credit at all.

Another way the unscrupulous dealer will try to take advantage of you is to say you must purchase the extended warranty in order to get a loan. This is just not true. What this does is it give the dealer another several hundred dollars in his or her pocket. They will try to just tack it onto the loan so not only are you paying around $1000 for something you don’t need, you are also going to pay interest on that money as well. $180 the first year. Don’t let them tack on a bunch of extra charges saying it is because you have bad credit. This just is not the case. Every thing they tack on is going to cost you money.

You may need to talk to several dealers and banks before you find one who will loan you the money if you have bad credit and you don’t have a co-signer. That is OK, you should try different places anyway in order to find the best deal. At this point getting a loan will be more important than which car you buy. This loan will be the first step toward fixing your credit because good credit is like gold. You will never be able to get one of those o% loans the car companies advertise if you don’t have a credit score over about 750.

Once you do get the loan be sure to make you payment a week in advance every month and never be late. When you are on the wrong side of the credit tracks any little misstep can derail you. This loan needs to be paid before everything else. If you are not sure you can pay it early every month then don’t waste your time signing the papers. You will just end up causing yourself more financial pain and it will be a deeper hole to dig out of.

As a last word, really think about what car you are purchasing and why if you are going to buy a car with bad credit.

4 comments to Buy A Car With Bad Credit

  • Good points raised here. I am grateful to you for that, however you deserve more thanks than that. I suffer from color blindness (deuteranopia in my case). I mainly use Opera browser (no idea if that changes anything), and a considerabland a number of web sites are challenging to comprehend thanks to a careless range of colours used. However, here, as the range of colors is good, the design is extremely tidy and pleasant to comprehend. I don’t know whether it was a premeditated and conscious undertaking, or just the ‘luck of the draw’, but I still thank you.

  • Last year investigated buying foreclosed homes but did not succeed. Would like to get your thoughts on investing in them.

  • Albert

    Real Estate is something that can be very tricky. The old adage Location, Location, Location is so true. If you are looking to purchase a foreclosed property be sure it is in a market that will have buyers. No matter how cheap you buy a house for if you can’t resell it that was not a good investment.

  • cool post. I have always liked autos. cheers

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