5 Tips for Buying a Car with Bad Credit


Buying a car when you have bad credit isn’t always easy. Some lenders simply won’t give you the loan you need, even if you now have a good job and are on your way to repairing your credit score. High debt, late payments, and vehicle repossessions can make it difficult to buy a new, or even a used, car. Fortunately, there are a few things you can do to turn things around and get the vehicle of your dreams, or at least the car you need. Here are a few tips for buying a car when you have bad credit.


Make a Good-Size Down Payment

If you can make a good-size down payment, you may be able to overcome some of the issues associated with bad credit. Your credit score will be a factor in how much money you can borrow and what the interest rate will be. If you can’t get a loan for the amount you need, you may still be able to purchase the vehicle you want by paying the difference as your down payment. This can also help you in the long term since you will be borrowing less money. That means you won’t pay as much interest over the life of the loan.


Have a Budget

One of the things that can get you into trouble financially is not knowing what you can afford. Your damaged credit score may have come from over-extending yourself, taking on more loans than you could pay for. Before you go car shopping, sit down and look over your income, bills, and leftover money. Do you have enough to commit to a monthly car payment? If so, how much can you safely set aside without impacting your necessary expenses such as food, clothing, rent, and other things? Even if you really want a certain car, you need to be realistic and make sure you don’t spend too much. If you do, you may end up defaulting on yet another loan, damaging your credit even further.


Understand the “Two Weeks” Rule

Whenever you apply for a new line of credit, no matter what type it is, the lender makes an inquiry on your credit history. This shows them all your loans and your credit history. Whenever you do this, it temporarily lowers your credit score a little bit. It’s not a huge amount, but it can be the difference between getting a loan and being denied. However, when applied for an auto loan, generally the credit reporting companies see all credit inquiries done by auto loan lenders within two weeks as one inquiry. This means you only take that hit once as long as you don’t go beyond two weeks from the first inquiry.


This means you should do your best to do your car search in a reasonable time. You can take longer than two weeks to look at cars, but once you get serious and start applying for loans, do so within a couple of weeks.


Short-Term Loans Have Less Interest

In most cases, going for a three-year loan over a five-year loan does mean you’ll pay less overall in interest. Some lenders are also more likely to give short-term loans to those who have bad credit, especially if you have a down payment. While it does mean your monthly payment may be a little higher than it would if you had a longer loan period, it does mean you’ll pay off your car faster. That can be helpful if you’re trying to pay down other lines of credit. The sooner you pay off your car loan, the sooner you can devote that money to paying on other things.


Have a Co-Signer

While it may not be ideal, you may need to get a co-signer to get a loan if your credit is too bad. The co-signer is basically saying that they take responsibility for the loan if you can’t pay it. This is a major financial obligation to take on, and many people are very cautious about co-signing. If you ask someone to co-sign on your loan, you want to be certain you can make the payments. If you can’t, it will likely destroy any relationship you have with the co-signer.


These are just a few tips for buying a car when you have bad credit. Fortunately, once you do buy a car and make the payments on time, it will start to positively impact your credit rating. At Eden Autos, we have flexible financing solutions to meet the individual needs of all our customers, regardless of credit scores and history. No matter what your current financial situation, our dedicated staff will help you drive home in a quality pre-owned vehicle from our extensive inventory that is right for you, with affordable financing in place that’s within your budget.