Best Way To Finance With A Bad Credit History

While bad credit won’t stop you from being able to buy a car, it can make the decision to do so much tougher. Getting a car loan with bad credit really depends a lot on the current lending climate as well as factors such as your income, how long you've been at your current job, and how much debt you currently have.

Here are a few tips to help you figure out how to buy a car even when you have bad credit history:

  • Check Your Credit Score
    Don’t just assume that your credit is bad or take someone else’s word for it. Take the time to go through your reports, check for any discrepancies and have them corrected immediately. Begin this process before you even apply for a loan as it will help you save money and time. Knowing your score allows you to clearly proceed with your financial situation and give you more confidence in the loan process.
  • Have Realistic Financial Expectations
    If your credit score is poor, then it’s important to be realistic about the car you’re looking to purchase. Buying an expensive vehicle will only make getting a loan that much more difficult. Instead, be practical about what you need for reliable transportation and you will stand a better chance of getting the best loan you can. Once you have worked to boost your credit rating and financial situation, you can land that dream car.
  • Make Your Bad Credit Better
    If you’re serious about needing an auto loan, you should get serious about repairing your credit first. While it’s certainly true that many past errors can stay on your credit history for years, there are some ways to boost your scores relatively quickly, and every extra point matters when you’re applying for a loan.

    One important factor in your credit score is how close you currently are to your credit card limits. As a result, if you can pay off or significantly reduce your outstanding balances, it could be reflected in an improved credit score in the very next report cycle. Another alternative is a debt-consolidation loan, which essentially bundles debt from different credit cards into one monthly payment. That kind of close-ended installment debt isn’t nearly the drag on your credit score that traditional, revolving credit card debt is, though it may require good credit to qualify.

  • Pay Cash or Provide a Large Down Payment
    A sure-fire way of buying a car with bad credit is to literally buy one—with cash. That can be easier said than done, of course, but it may be manageable if you put pre-owned vehicles on your shopping list. Paying for a car now also could help keep you out of credit trouble in the future, since you’re not adding a monthly payment to your budget.

    If you can’t afford to pay outright for a new car—or a used one, for that matter—put up as much cash as possible up front. Lowering your loan amount lowers the risk to the lender, upping your chances for a good deal. Just be sure to leave money aside for emergencies, too.

  • Choose a Realistic Car
    No doubt, it’s tempting to want something fancy, but you also want to avoid something that’s small or too junky-looking. A luxury car would be extremely expensive and would possibly interfere with your chances of staying on track financially. You also don’t want a car that you will be dumping your paycheck into repairs. Look for a car that is in good shape, runs efficiently, and is reliable. Look for a fuel-efficient and reliable economy car. You may qualify to purchase a more expensive car, but choosing a reliable used car until your credit score improves will help you stay within your budget.

If you’re ready to purchase a used vehicle Robins Financial can help. Learn more about auto loans from Robins Financial. You can also use our Auto Loan Calculator for a quick and easy way to estimate your monthly payment.

When you’re ready to buy, our friendly staff can walk you through the process. Apply for a Loan online today, or stop by any of our branch locations to speak to a representative about your financing options.

If you’re not quite ready to buy, create a savings goal inside of Money Manager and track your savings for a down payment. Eligible members can also view their FICO® Score in Online Banking.

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