How to Get a Car with Bad Credit - 8 Simple Tips

 

Did you know that 68 million Americans have bad or poor credit scores? You aren't alone if your credit score is under 600. That might make it seem like you won't be able to get the financing you would require in order to purchase a much-needed new car. Yet, that's far from the truth.

There are steps you can take to get the right financing for your dream car even if your credit score is less than perfect. Not sure how to get a car with bad credit, especially if you had a bad experience in the past trying to get a loan? That’s why we put together these 8 simple tips you can do to get approved for a car loan even when it might seem impossible.

1. Check Your Credit Scores Before Shopping for Your Car

You might be tempted to run to your car dealer to find your dream car, SUV or truck, but it's important to first do your research and know where you stand before shopping for your next vehicle. It’s important to first know what your credit score is since that can give you an idea of where you stand towards getting approved

You are entitled to one free credit report per year from each of the three major credit bureaus, Trans Union, Experian, and Equifax. Your credit scores may vary somewhat from agency to agency as each follow slightly different scoring methods, but they should be within a few points of each other. The first thing to do is check for any inaccurate information and notify the agencies to get them corrected. Once the corrections are made your scores will improve accordingly.

2. Work on Improving Any Bad Credit Items

Payment history and unpaid credit card debt have a significant impact on your credit scores. The first factor comprises 35 percent of your overall credit score, and credit utilization accounts for 30 percent. A history of late payments and high credit card balances will definitely result in a reduction of your credit scores.

If your need for a new car is not immediate, avoiding any future late payments and paying down as much of your credit balances as possible can go a long way in improving your credit score. Many experts recommend getting your credit utilization ratio (debt to credit limit) to under 30 percent. But, these are things that will take time before you see positive results, so how can you get that much-needed new car or truck right now?

3. Make a Realistic Budget for Your Car Purchase

We all like nice things but sometimes we can't afford them. Before visiting the car dealership, it's important that you make a budget for your car purchase. What is your monthly income? What are all of your monthly expenses including utilities and other financial obligations. And don’t forget estimated operating costs such as fuel, maintenance and repairs, and insurance. It's important to aim for an overall monthly car expense that isn't a burden that can cause late or missed loan payments.

4. Don't Go Overboard Adding Extras

You might be dreaming about getting a car or truck that's top of the line with all the extras. Yet, these extras will surely add to your loan amount. Getting an extended warranty could save you money in the long term, but what will fancy bells and whistles do besides add to price of the vehicle? Before considering an extra, take a look at whether it’s something you really need and worth the added cost.

5. Research Your Car and Financing Options

Now that you know your credit score and what you can afford, it's time to shop around for the right vehicle and financing that fits your budget. When you have bad credit, it's recommended to look for lenders who are more receptive to working with you, which usually eliminates traditional lenders like banks and credit unions. The best opportunity, in our opinion, is to work with a reputable used car dealership; one that has a good selection of vehicle types and price ranges and can provide assistance with a variety of financing options. Many of these dealerships offer instant pre-qualifying and guaranteed approvals.

6. Plan to Make a Larger Down Payment on Your Car Loan

Besides your credit score and current ability repay the loan, the loan amount itself will influence your chances of approval, and obviously affect the monthly payment amount. One way to lower your loan amount is by putting down a larger down payment. You have a better chance of getting approved for a car loan when you request a smaller loan amount, and it can make the payments even more manageable.

7. Get Pre-Qualified

It’s certainly important to first research what type of vehicles and models best fit your needs and budget, which can be accomplished from the comfort of your home. Practically every dealership today has their vehicle inventory online, making it pretty easy to get a good idea of what’s available in your price range before visiting them. And pre-qualifying for financing can be just as easy, with loan applications online as well. Once you have done your vehicle research and have a dealership in mind, complete their loan application form; you’ll usually get a response within a day or less. Once pre-approved, then it’s time to pay them a visit and find out the specific financial options available to you.

8. Read All the Paperwork Before Signing

Not all loans work the same. Even if this isn't your first car loan, it's important to read all the paperwork before signing on the dotted line. Don't be afraid to ask if you don't fully understand the terms and conditions. Your car loan officer should be able to answer all your questions and explain how the loan works.

Bottom Line

Getting approved for a car loan when you have bad credit may have seemed impossible, but we hope that by following these tips you will be able to make your new vehicle dreams a reality.

At Eden Autos, our professional team works to put the customer first. We always go the extra mile to ensure that your visit to our dealership is a great experience. Our goal is to always provide exceptional customer service with a hassle-free process, each and every time.

We have an extensive inventory of late-model cars, trucks, and SUVs at affordable prices. Every vehicle we sell comes with a 30-Day, 1500 Mile Bumper-to-Bumper and a 5-Day Unconditional Money-Back Guarantee for complete confidence and peace of mind with your purchase. We offer financing options for all credit ratings. Simply fill out our short online loan application and get an approval in minutes.