GETTING A VEHICLE TO KEEP YOUR LIFE MOVING FORWARD WHEN YOU HAVE BAD/NO CREDIT

Buying a car with bad credit may seem difficult, but it's actually easier than you think. Many dealers now allow you to buy a car without having good credit. Here, we tell you how to find these dealers and the requirements to buy a new or used car with bad/no credit, especially when you have been rejected before.

How can you buy a car with bad credit?

It's not as hard as you think.

The most important thing for you to buy a car with bad credit is to look for options. Not all car dealers will be good for you. Many will give you a car if you have bad credit, but they will not always work in your favor. Having a good credit score is very important, but it is not really a necessity.

The first and most important thing to know: the average interest given by some lenders to their clients with good credit is between 4% and 5%, while some high-risk lenders give between 10% and 13%, depending on their credit score. Other car dealers may give a higher figure, so it is very important to compare interest rates.

BUYING A CAR WITH A BAD CREDIT

Having bad credit does not mean you have no options when buying a vehicle. We will now show you the options you have to buy a car with bad credit. Follow our step-by-step guide to find the best price and pay less in interest when buying a car with bad credit.

Check this link for more details on this topic.

1. Don't assume the worst:

Don’t allow anyone to tell you that you have a bad credit score. They might be wrong or maybe talking without any concrete evidence. To become aware of your status, ask for a credit report so you can know your credit score exactly. Learning about the credit score isn’t much difficult. Our post about understanding your credit score can help you out.

Even two people with the same score are not the same in the eyes of a lender, so if your credit is not as good as you think, you may have more chances with the right used car dealer than someone else in this situation.

2. Aim High:

Keep one thing in mind – having a loan to buy a car means less money in a short time, and a car is easier to recover by a lender than a house. The same credit that put you at a high-risk point for the loan may help you get the car you want, that's why you should aim high. You can get a good car loan easier than a good house loan; all you have to do is be brave and follow a few simple steps.

3. Compare options:

Some lenders will see your credit score more positively than others. That is why it is important to look for many options and not abide by a specific one, but you must be careful since some may be a trap.

4. Start from the basics:

Let’s assume that the car dealers will not give you the loan; you lose nothing by asking your trust bank or your nearest credit union. They will give you the best interest rates, as dealers earn money by making you pay more interest and hidden fees.

5. Get the best lenders:

Search from known sources of lenders that finance vehicles. These include national and regional banks, as well as online lenders. In-house financing options by some used car dealers are definitely an option to investigate.

You can check our three-part series on in-house car financing options (Part 1, Part 2, Part 3) and understand easily about how this option works.

6. Do not go alone:

Ask a friend or close relative to go with you. Not only is it moral support, but it will also help you listen or see what the lender will offer you, providing you another point of view and different perspective. It will also help you see the tactics that some sellers use to scam their customers.

7. Do not be fooled by monthly payments:

Don't be fooled; there will be lenders that will offer you fairly low monthly payments for a long period of time. The only way you can complete payments is under a long period of time. That’s why it is a better option to have a higher downpayment so that you can feel comfortable and are not packed with endless monthly payments. Not sure how you can calculate payments on your auto loans? You can check our post on auto loan calculators that will help you out.

The best advice: Multiply the number of monthly payments by the number of payments you will make to get the total amount you will pay, including interest.

8. Beware of "extras"

Some contracts will be full of some "extras" in which you can get things like guarantees, insurance, among other things. They may be flashy, but they will be a charge in the future and you may not be able to afford with them.

9. Beware of the “me” or “yo-yo” scam

If you plan to buy a car with bad credit through a dealer or dealership, make sure the deadlines are agreed, without contingencies or conditions before you sign and leave with your vehicle. Many buyers have complained that days or weeks close to their payment notice that the agreed price had increased. This is also known as the "yo-yo" scam. Victims of these types of scams pay a percentage of 5% above the interest rates.

How to rebuild your credit

There is a dilemma among young people, especially students who want to get their first car loan and it is not possible to get one because they do not have a credit history. As a student, you need a car to step foot into your professional life. Commuting to and from college and work can become a hassle. In order to keep everything in check and save your time, having a car is a necessity.

Getting a car without a loan is virtually impossible for students. Getting a loan without a credit history is a big no-no too. So, what do you do then? Build your credit history. Here’s what you can do as a student to build your credit history.

While you might find it difficult to get auto finance as a student, you still can get it if you play it smart. Click here to learn how you can get an auto finance loan as a student.

1. Get a cellular plan in your name

Few people know that mobile phone operators report to credit rating agencies, and if you make payments timely (even if your parents help you) you will begin to build a positive history. But, be careful, this option will not work if you have a prepaid plan.

2. Open a bank account

Instead of your parents giving you your cash allowance, ask them to deposit it in an account in your name. With this account, you can manage your expenses, generating bank transactions that in the future will allow you to check income and, therefore, you will have easier access to bank credit. When you handle your current account in a responsible manner, you may receive calls from financial institutions to offer you a credit card.

3. Apply for a beginner credit card

Some institutions offer credit cards without having any history, but with very high-interest rates. Try to be careful and pay the total amount on time and do not generate interest. Create the habit of becoming a “total zero.”

4. Get a departmental store cards

It is a viable option since, in some cases, these cards do not ask for credit history, the interest rates are lower than in bank cards and also offer exclusive benefits in the department store. However, you have to be cautious and not fill the portfolio with these cards. The idea is to get one of these, pay the bills on them in a responsible and timely manner. This helps you put points on the board for being a responsible spender.

5. Consider collective financing or crowdfunding platforms

Crowdfunding is a way, developed through platforms online, aiming to raise funds to finance projects. It is also a good alternative to build your credit history since you only need a bank account in your name and official identification to be able to use that account. The peculiarity of this alternative is that it can be funded by your relatives through the platform of your choice, and if you are punctual in your payments, you will begin to create a positive credit report for yourself.

If you follow these tips as a student, surely when you go out and enter the professional phase of your life, it will be easier for you to acquire a traditional car loan, in addition to having acquired proper financial discipline along the way that will help you maintain your credit score in the future.

Do you think your habits are hurting your credit score, but aren’t sure? Don’t worry; you can read our post on this topic and make sure if your habits are actually bad.