Bad Credit Car Buying

Get Car Financing
Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - July 18, 2019

Imagine getting the car you need and building your credit all at once. It's possible. The best part is that you don't need good credit to get the process started. All you have to do is follow a few simple tips. Come as you are – bad credit and all.

3 Bad Credit Car Buying Tips to Help You Get Started

Before you jump right into searching for bad credit car dealerships, filling out applications, and getting loans, there are some things you need to do. The bad credit car buying process starts at home well before you ever set foot on a dealer's lot.

There are three things you need to do at home before you start looking for a loan:

  1. Get your credit reports and score – This should be the first step for any major purchase, especially if you know you're struggling with your credit. You can get a free copy of your credit reports once every 12 months from each of the three major credit bureaus – TransUnion, Experian, and Equifax – by visiting www.annualcreditreport.com. Typically, you can get your credit score at the same time, although you have to pay for it. If you want to avoid buying your credit score, you should check with your bank or credit union to see if they offer this service. If they don't, you may be able to view it through your credit card company. You can always check online resources as well, or sign up for a credit monitoring service – either for free or at a small charge, depending on the company.
  2. Establish a budget – Now that you know what your credit looks like, you can research the typical interest rates for people with similar credit and determine your car buying budget. To see how much you can afford to spend on a car payment, you have to calculate your debt to income (DTI) and payment to income (PTI) ratios. DTI compares your bills to your pre-tax monthly income, while PTI lets you know how much of your income is going to be used by a car payment. To calculate DTI, add up all your existing bills, including an estimated car and insurance payment, and divide this total by your pre-tax monthly income. The result is the percentage of your income you use each month. If this number is greater than 50%, a lender isn't likely to approve you for financing. If your DTI is less than 50%, you can move on to calculating how much you can afford to pay each month. We recommend not using more than 15 to 20% of your monthly pre-tax income on a car payment. To see a range for the most you should spend, simply multiply your pre-tax monthly income by 0.15 and then by 0.20.
  3. Research options – Now that you know where your credit stands and what your budget looks like, it's time to check out your vehicle options. Keep in mind that with bad credit car loans, you can't choose your specific vehicle, go to any dealership, and get a loan for it. Instead, you have to find a dealer that works with subprime lenders, get approved, and then they let you know the cars they have available in the loan tier you qualify for. So, why do research, you ask? For starters, you can look up vehicles with good resale value, reliability rates, and safety standards, and use customer reviews to find out what current and past owners have felt about a particular make or model. You can also see which features come standard on certain cars, and make a list of must haves that meet your driving needs. Not all dealerships have the same inventory, so knowing what you need ahead of time goes a long way.

Finding a Special Finance Dealership

Once you take care of all the prep work, it's time to find a loan. Since bad credit makes it difficult to qualify for auto financing with a direct lender, your best bet is to visit a dealer that’s signed up with subprime lenders. Subprime lenders work with people who don't have the best credit, and are available exclusively through special finance dealerships. Finding one can be tough, but that's where we come in.

Here at CarsDirect, we work with a nationwide network of special finance dealers that have the lenders your need. You can also do your vehicle research right here through our new and used car sections, or estimate how much you might qualify for by using our car loan calculator.

Don't waste time and money driving all over town without a goal in mind! Instead, do your homework, and then fill out our fast, free, and easy auto loan request form so we can get to work connecting you to a dealership in your area.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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