If I Have a Bad Credit Score, Can I Still Buy a Car?

Credit woes can leave you nervous at the idea of creating a new loan. Some purchases, however, do not require the use of your personal credit score. When buying a car with bad credit, there are loan programs available but you can also avoid loans altogether by considering alternative financing options.

Loans

Having bad credit does not automatically exclude you from qualifying for a loan. There are loan program for people with bad credit as long as they can prove they are employed. However, these loans have inflated interest rates which can mean high monthly payments. You may also be required to pay a higher down payment on the car due to your bad credit rating.

Cash

Consider a used car set at a "cash" price instead of a bad credit loan. A cash price is an amount that can often be paid from a savings account. If you have savings or time to save a few thousand dollars for a car, you can circumvent the process of applying for credit. You can sometimes purchase cash cars from dealerships, but the most common way to find them is in the classifieds section of your newspaper or in online classifieds.

Credit Cards

Many credit cards carry limits to support the purchase of a used car. If your credit card has a high limit, consider using it to finance your vehicle purchase instead of applying for a loan. However, if your credit card interest rate is higher than the interest rate you would receive on the loan you may want to reconsider. Review the prepayment penalties of the loan as well as administrative fees. Compare these to the fees on your credit card before making a final decision.

Considerations

Using your own money instead of getting a loan gives you control over the transaction and does not impact your credit score. If you prefer a new car over a used car, saving for a down payment while improving your credit score over time may be your best bet. New car costs are generally too high to be paid for with cash.