How to Purchase a Used Car With Poor Credit

Auto financing is one of the easier loans to get with bad credit. This is because car loans are secured debt, debt where the bank can seize something you own (the car) if you default on payments. You won't necessarily get the best interest rates or be able to afford the nicest car, but getting financing shouldn't be a problem.

Instructions

1

Look at your personal finances, including major regular expenses such as rent and your usual monthly income. Decide on a monthly car payment of no more than one quarter your income after expenses.

2

Check your credit history. Each of the three major credit bureaus will provide you with one free copy of your credit report every year. You can contact them directly or use one of several inexpensive Internet credit check services.

3

Save a down payment of at least $500, unless you plan to trade in a car worth that much or more.

4

Resolve any major outstanding actions on your credit report. Don't worry too much about late payments, but do pay off any collections actions. Get a letter stating you've done so each time you send a check.

5

Go to a car dealer near the end of the month, when quotas and bonus structures make the sales staff hungry. Also consider any "sales events". The sales team is often competing for an extra bonus or is otherwise motivated to help you buy a car.

6

Choose a car that will fit the budget you've decided on. Negotiate a deal with the sales staff, factoring in your down payment. Don't buy too inexpensive a car: cars worth too little don't represent enough interest income to justify the risk of an auto loan.

7

Let the sales staff do the heavy lifting when it comes to getting you approved for a loan. If they can't find a lender, then they don't get paid for the sale.

8

Arrange for a co-signer if your credit is too bad to get the loan on your own.

9

Sign documents on the loan and drive away in your new car. Make your payments on time every month to build credit.