Finance a Car With Bad Credit

When looking to Finance a car with bad credit, you need to realize that it can be tricky depending on your situation. However, it can be done even if you have previously filed for bankruptcy. Poor credit makes shopping for a vehicle difficult as it affects your finance options, including your interest rate, and how much you can borrow. So what can you expect when you are car shopping with less than good credit?

First be aware of what dealer you are shopping at. Some dealers specialize in financing cars to people with poor credit and many of these are less than honest. These dealers often increase the price of the vehicle they are selling as well as inflating the interest rates. The result is that buyers with poor credit end up paying two to three times what they may for a used vehicle. So how can you avoid this? Simple, do your homework. Know the wholesale prices of the cars you are thinking of buying and refuse to pay an inflated price. You may not be able to avoid the high interest rates though.

The second way to avoid paying too much for your car is to get a third party loan from a bank, through an online bank, or other lender. This allows you to shop for your car as if you were paying with cash. You will still have to pay the loan back but you may qualify for a better interest rate as well as avoid unnecessary mark ups or dealer fees. Dealers make money on loans through their finance company so any loan you get from a dealer is going to be more expensive than a bank.

Work out your loan prior to choosing a car. Knowing what you can afford and qualify for may make the process easier for you. It is easier to say that you can afford one of four cars instead of falling in love with one vehicle and then trying to make the financing work.

Extended warranties should also be looked at carefully. With poor credit you will already be paying a higher interest rate, but buying a longer extended warranty you are only increasing the amount of your monthly payments and the overall cost of the car. Even the smallest amount of money with 20% interest adds up over time.

Finally you should always try to repair your credit score as much as possible prior to buying a new car. Even six months worth of paying your bills on time may allow you to qualify for a loan you previously would have been rejected for. Getting your finances in order and under control before adding another expense if at all possible is best. Print out your credit score ahead of time as well and have it with you. Some dealers may attempt to lie to you in order to increase your interest rate. If you can produce your credit score you not only can prove them wrong but find another, more honest dealer.