How to Buy a Car With Credit Problems

It's easier to buy a car with perfect or good credit. You'll obtain the best interest rate on the loan, which results in cheaper or manageable monthly payments. But even if you don't have the best credit rating, it's possible to get approved for a car loan. Shopping around for the best auto loan and taking other measures improve your odds of driving away with a new car.

Instructions

1

Read your credit report. Assess credit damage by obtaining a free report from AnnualCreditreport.com. Order a copy of your credit score to learn your credit rating.

2

Get your finances in order. Auto lenders want to see proof of income or other assets if you have credit problems. Make copies of your most recent paycheck stub, tax returns or bank statements to demonstrate your ability to pay the monthly note.

3

Start saving for a down payment. A down payment reduces the loan balance, and it can help you acquire an auto loan with credit problems. Plan to pay at least 10 percent of the purchase price.

4

Find a co-signer. Ask someone with an excellent credit history to co-sign your auto loan. As co-signer, he is required to pay the monthly car note if you default or stop making payments.

5

Shop around for the best deal. Some lenders take advantage of people with credit problems by inflating the interest rate. Secure your own financing before visiting a dealership, and obtain loan quotes from at least two or three lenders to ensure the best rate and loan term.

6

Pay cash. Consider saving your money and paying cash for a used vehicle. Apply for an auto loan once your credit improves.