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Financing a Used Car With Bad Credit

When you have bad credit, it can be difficult to finance a used car. Everyone needs reliable transportation, but having bad credit oftentimes translates to higher interest rates and car payments. Despite these common obstacles, there are ways to get financed, even if your credit isn’t in the best shape. If you have a low credit score and you are in the market for a used car, here are some things you can do to increase your chances of securing financing.

 

Make a Large Down Payment

 

Making a large down payment is a simple, yet effective way to boost your chances of getting approved for financing. It shows financial institutions that you are serious about purchasing a vehicle and that you are capable of saving and managing money. You also present less of a financial risk, since buyers who invest large sums of their own money are less likely to default on loans. Buyers who make a down payment may also gain access to better interest rates.

 

Rebuild Your Credit

 

This may seem like an obvious course of action if you have bad credit, but it is the most efficient way to ensure that you get approved for a loan. Paying off overdue bills and establishing a history of responsible credit use can go a long way when it comes to securing financing. Car buyers with lower scores will be subject to higher rates and less favorable payment terms.

 

Use a Cosigner

 

Using a cosigner can greatly improve your chances of getting financed. Enlisting the help of a spouse or close family member is the most common practice when it comes to cosigning. It should be noted however, that if you do not make your monthly payments on time, your cosigner will also be held responsible.

 

Don’t Despair

 

In the world of used cars, there are practical ways to secure financing with bad credit. At our dealership, we offer customers a variety of financing offers, and we are sure that we can work with you, regardless of your financial situation. Don’t give up just yet; there are many ways to finance a car with less than perfect credit.

Top 4 Car Loan Red Flags

If you are like most car buyers, you much search car loans before purchasing your next automobile. When looking for the right loan and lender, watch for certain warning signs you are about to get a bad loan. Here are the top four most common car loan red flags.

You Don’t Know Your Credit Score

If you are shopping for a car loan without knowing your credit score, you are making a big mistake. Auto lenders judge your creditworthiness by looking at your credit score. Since they will know your score, you should too. If you don’t, you are not in the best position to negotiate favorable loan terms.

You Haven’t Considered All Your Options

There are many institutions that finance cars. Banks, credit unions, financing companies, and dealerships all might offer you a car loan. If you haven’t considered each of these options, you might not be getting the best deal. As such, before you go shopping for your new car, look around for financing options.

You Have Fallen in Love With a Car

Whether it’s the engine capacity or the leather seats that drive you wild, it’s okay to fall in love with your car. It is not, however, okay to fall in love with it when you are negotiating your car loan. When bargaining for the best repayment terms possible, you don’t want your emotions to take control. Try finding a car you like and waiting to fall in love with it until you drive it off the lot.

You Don’t Know What Competitors Have

Unless you know whether you can find your car at another dealership, you won’t be in the best position to negotiate beneficial loan terms. If you can walk away from the table and buy your car elsewhere, you will have enhanced bargaining power.

When searching for car loans, make sure you watch for these red flags. If you notice one of them, you should probably rethink your car loan.