

Buying a car on bad credit can be a daunting task. This is because many lenders often shun subprime borrowers. A bad credit score is to many a harsh indictment of their fiscal discipline.
But it does not have to be. Options abound for people seeking auto financing on bad credit. While some of these options may not be sugar-coated with the best interest rates, there are some that could nonetheless get you a car in spite of a bad credit score. Let’s look some of these options.
1. Consider Leasing
Leasing a car makes more economic sense, especially if you are heavily indebted. When your credit score is bad, you need every penny you can get to make those credit card and other debt payments without fail.
Since leasing a car attracts less monthly costs as opposed to the monthly payments for a car loan over the same period, you have more money in your hands to meet your monthly loan obligations. In any case, with a leased car, you pay for the depreciation of the car and not the whole vehicle cost.
Another advantage of a leased car is that the initial down payment is far much less than that of buying a car. In some cases, you can even negotiate for a waiver on the down payment. Besides, if you are the type that loves driving the latest model, leasing a car is for you since you can always renew the lease and drive away in the newest model. When your lease term expires, all you need to do is drive the expired lease car, enter into a new lease, and drive out in a brand new car.
2. Don’t Take Financing Advice From A Used Car Salesman
Most used car salespeople have one thing in common: “to get you into a car” right now. Their main aim is to make a sale and not to get you the best financing deal possible.
The decision to buy a new or used car is not one you make overnight. It’s an important decision with a huge financial commitment. The last thing you want is to be pressurized by an overaggressive used car salesman to buy a vehicle you were not prepared for. Be wary of those “hard sell” salesmen who won’t leave you alone. Instead, go to dealers with upfront pricing so you don’t have to keep haggling for the best price.
You will also need to be careful about a used car salesman who first wants to sell you a payment without even discussing the cost of the car. This should raise a red flag. If a salesman realizes you are overly concerned with the payment, he will stretch it as far as possible in an attempt to get you lower payments. In the real sense, however, you will end paying so much more. A good salesperson will carefully listen to your situation and work with your budget.
3. Use Price Comparison Sites
There is a number of online car comparison tools that you can freely use to establish the right price for the car you want to buy. With today’s sophisticated technology, you could arrive at a car dealership with more advanced knowledge of the car you want to buy than the used car salesman. This will put you at an advantage since you won’t fall for the hard-sell approach by the salesperson. You are also likely to get the car at the lowest possible price since you know exactly how much it’s worth.
4. Approach An Auto Loan Lender In Spite Of Your Bad Credit Score
Don’t assume you won’t qualify for an auto loan. You will be surprised that your preferred auto loan lender will be more than willing to approve your car loan application. In any case, subprime auto loan lenders understand your circumstances and have car loan packages designed with someone like you in mind. A word of caution here, though: don’t take up the first loan you are offered. Check out a few lenders first and settle on the most competitive.
As you consider various loan offers, keep a close eye on those credit reports and stay away from hard credit inquiries. You don’t want to get into further trouble with a worsened credit score. A hard credit inquiry is likely to mess up your credit recovery journey. Instead, go for soft credit inquiries that are unlikely to dent your credit score further.
5. Consider Approaching A Friend Or Family Member To Be Your ‘Cosigner’
A cosigner is a person with good to excellent credit rating who can repay a loan in case you default. You might be lucky to get a friend or a family member who would be willing to be your cosigner. This is a good arrangement since it’s their excellent credit score that will get you the car loan. As long as you make the payments without fail, having a cosigner will save you from potentially damaging hard credit pulls and almost guarantee you an auto loan.
A cosigner gives the lender confidence to grant a loan while giving you a chance to reclaim your good credit by faithfully settling the loan. Since you are using the credentials of someone with good to excellent credit score, you attract lower interest rates. When you make the car loan payments on time, your credit score steadily improves to a point where you may not need a cosigner in the future. Your relationship with the cosigner also benefits due to the trust established between you. You also get to benefit from the coaching of a cosigner who has definitely mastered the art of living on the good side of credit.
However, having a cosigner does not absolve you from the responsibility of paying back the loan. You should be as committed, if not more committed, to paying back the loan as much as you would be if it were your credit history on the line.
6. Work On Your Credit Score First
After considering all the available options, you might find wisdom in waiting until your credit score gets better. In the meantime, work on improving your credit score by disciplining yourself to regularly paying your current debts. While the journey to a credit score recovery is long and arduous, the benefits of finally getting into good to excellent credit are highly satisfying. Stay the course and don’t veer off even when every fiber in your body is screaming at you to take another loan.
To start repairing your credit score, get a free copy of your credit report and start scrutinizing it for errors. This can all be done online. Should you find errors in your report that may have affected your credit score, bring these to the attention of your credit bureau for possible credit score correction.
The other thing you need to do is to set up automatic payments for your current loans. This is to ensure that you don’t default on loan payments again. Other tricks that are highly effective in repairing your credit include paying all your bills on time, reducing debts by paying them off as opposed to moving them around, keeping your credit card balances low, and not opening new accounts or applying for a new credit card.
You might even consider hiring the services of a credit repair specialist who will scrutinize your credit report and systematically assist you in removing every item that is hurting your credit score.
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