Even If Your Credit Sucks, Buying A Car Doesn't Have To


So, Your Credit Sucks

If your credit does suck, that will mean that financing a vehicle might be a tricky and expensive proposition for you. Here are some common sense things you can do to help improve your chances of getting approved, getting a better interest rate, and smart ways to finance a vehicle.

Learn How Bad Your Credit Sucks
Credit suckiness is a relative term and lots of factors go into getting an approval. The first thing you should do is review your credit report. You can do this for free at www.annualcreditreport.com. Fix any mistakes and clean up your report before applying for a car loan.

Bonus: There is a new federal law that requires all lenders to provide you with some basic information, including your credit score, if they cannot offer you the best available rate. Make sure your car dealer provides that to you.

Save Up Your Money Most banks that will finance someone with credit issues require a down payment of 10 to 20%. But that is the minimum you should consider. Aim for 30-50% down. This has two great benefits for you. First, your chances of getting approved are greater with a big down payment. Banks love equity. Also, if you are approved, a lower loan-to-value ratio for the bank will generally mean a lower interest rate for you.

Beware: Make sure your car dealer doesn't just jack up the price and "capture" your down payment. Negotiate and shop around.

Buy The Cheapest Car That Works For You Most everyone wants a loaded, luxurious vehicle with low mileage and alloy rims. But when you are paying 18-24% interest, that stuff just costs you lots of money. Buy an older car and keep your amount financed lower.

Beware: Make sure you get your car checked by an independent mechanic, ask about a warranty, and get the Carfax report.

Go For The Higher Payment Well, no. Don't do that -- make sure its a payment you can afford so you don't make your credit worse. But yes, keep the term short and the interest you pay will be less. A slightly higher payment can save you thousands in interest.

Bonus: A shorter payback terms means you build equity faster and can trade sooner if your credit improves.

Make Sure It Is Reported Big problem here -- you get a car from a dealer where you make the payments at the dealership. You pay faithfully for 3 years and what do you have? An older, paid off car! But no credit. Do Not finance a car anywhere unless the credit will report to at least one of the national credit reporting agencies.

Beware: Have your dealer put it in writing. Just because he says he will report the credit doesn't mean he will

So, get informed, save up the cash, buy a less expensive car for the shortest possible term and you will be on the road to credit success! If you have any questions or want a free credit review, contact me at Consumers Auto Warehouse in Staunton, VA. You can call us at 540-213-0202, email me at ajwiley@cawcawcaw.com or apply online at www.cawcawcaw.com.

Comments

  1. Nice Posting....Your Credit Sucks If your credit does suck, that will mean that financing a vehicle might be a tricky and expensive proposition for you.

    bad credit auto financing

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