Bad credit can be a tough thing to overcome. However, the goal is achievable. You can find a car and get financing for it with bad credit if you know how to go about it.
It’s not just about your salary though, so don’t settle for what you think might work. Instead, focus on these 3 ways that have been proven to help people finance cars with bad credit.
How to Finance a Car When You Have Bad Credit
Here are the easy ways you can do a bad credit car finance:
- Lease: You might be able to lease a new car. With this option, you’ll need to have good credit to qualify.
- Loan: If you already have a car that has negative equity, it may be possible for you to refinance that vehicle into your low-credit situation.
- Buy: You can purchase a car with bad credit by getting an auto loan from your bank or other financial institution. It may vary depending on what type of business you do and how much mileage is on the vehicle.
Understand What You’re Up Against
The first thing you need to do is understand just how hard it would be for you to get financing. You’ll want to work with a good dealer who can help you find a car your budget and credit score will allow.
You should also know what trade-in value the dealership will give you for your current vehicle. It’s important. They may not offer as much as you think for it, which could make it tough for you to purchase a car in the first place.
Once you have those two things figured out, it’s time to consider other options like leasing or buying a car outright without needing financing at all. If those options aren’t feasible, many companies specialize in bad credit car loans. You should look into them, too.
Get Pre-Approved For a Loan Before You Buy a Car
The first step to financing a car with bad credit is getting pre-approved for a loan. You want to do this before you start looking for your car because it will give you more leverage when it comes to negotiating. Once you find the car of your dreams, take the paperwork from the pre-approval with you to show the dealer.
The fact that you’re pre-approved will make them more likely to work with you on pricing and they will also be able to get back to you faster if they need additional information from your lender. If you’ve been pre-approved for a loan online, bring those documents with you as well because many dealerships may not accept online applications.
Consider Leasing a Car
Leasing a car is one way you can get around having bad credit. This is because the leasing company will base the amount of your monthly payment on your income, not what you owe on the vehicle.
If you have bad credit and want to lease a car, make sure that you’re working with a reputable dealer who will show you how leasing can be cheaper than financing over time.