Buying a car can be a nightmare when you have bad credit. Sure, you can get a car loan, but the interest rate lenders will offer you are less than desirable. Getting a good car loan offer is possible when you plan ahead for your car purchase. Planning for a future car purchase requires that you save money for a down payment and closing costs associated with buying a car [i.e.; taxes, tags, and title]. When your credit rating is below average, or poor, it’s a good idea to start looking for a co-signer to make your car loan possible.
Having a poor credit rating is not a death sentence. There are companies that will offer you an affordable loan regardless of your credit history. These loans are considered undesirable by most because these loans are associated with unbelievably high interest rates, but you may not have a choice when your credit is in the gutter.
Start saving your money now if you plan on buying a car in the near future. Save enough money to cover half of the car’s total value that you want to buy – this will keep your monthly payments low and may potentially make you eligible for a lower interest rate. Even if your lender will not approve a low interest rate; lower monthly payments will help absorb the sting of a higher interest rate.
You will also need to set aside money for closing costs associated with buying a car. Dealerships that offer in-house financing for people with bad credit may add the closing costs to the total amount you owe on the vehicle. Adding this amount helps you in the short term because you don’t need to pay the money upfront. The downside of not paying these fees upfront is that you will increase your monthly payment when these fees are added. Paying these fees when you purchase your vehicle will save you from paying more for your vehicle in the long run.
Finding a co-signer for your loan application will help you get a better loan offer. Having a co-signer gives the bank a warm feeling that they will get their money if you stop paying on the loan. Lenders may offer you better interest rates when using a co-signer and they may offer you better financing options.
Planning is essential when buying a car when you have bad credit. When you are ready to purchase a car, help the lenders feel more confident financing your car by having a sizeable down payment available and a co-signer willing to vouch for you. Planning ahead will help you get in the car of your dreams, so get started today.