Tips on Buying a Car With Bad Credit

Credit reports and credit scores are very important. Good credit scores open doors to the best financing options, while bad credit scores do the opposite. However, if you have a bad credit history, a major purchase, such as a car, isn't out of the question. There might be some financing options available, depending on how low your credit score is.

Put Together a Down Payment

Putting together even a small down payment will significantly increase your chances for loan approval. Car dealerships also might allow a higher loan amount if you have a down payment. A person applying for a $12,000 loan with a down payment has a better chance of approval than someone applying for a $10,000 loan with no down payment.

Do Some Homework

Try to learn the market. Research what the rates of interest typically are for someone with your credit score. Don't rely on a car dealer to be honest. They are out to make money, and someone with poor credit provides an excellent opportunity. Having some information on hand will help you greatly when you negotiate.

Do Not Buy the Extras

Car dealers may try to tell you that you are legally required to purchase extended warranties, extra insurance or credit life policies. Even if your credit is poor, you are under no legal obligation to purchase any of these. Politely refuse and threaten to take your business elsewhere if they persist.

Inquire About a Lower Interest Rate at a Later Time

With poor credit, your initial interest rate might be rather shocking. Ask about the possibility of a lower rate at a later time. Some finance companies will lower the interest rate if you maintain your payments for 12 to 24 months.