When you have poor credit, financing a car can be a challenge, and coming up with the money you need may take some work on your part. While auto financing may not be easy for you, you may still find some options out there to help you buy the car you want.
Secure the Loan First
If you have poor credit, you may want to focus on securing the auto loan before you actually shop for your car. Many people mistakenly think that you have to pick out the car and then take whatever financing is offered by the dealer. That, however, is not the case. You may secure auto financing from any number of lenders in the market. You may start the process by applying with online lenders and auto lenders in your local market.
Down Payment
It is to your advantage to come up with a larger down payment. Lenders feel more comfortable extending credit to a buyer who is investing a significant amount of his own money into the purchase. It lowers the inherent risk for the lender and also means lower payments for you over the life of the loan.
Guaranteed Auto Financing
Even if you have poor credit or no credit, you may still obtain financing from automobile dealers who promote "guaranteed approval" or some other similar term. These are also sometimes referred to as "buy here, pay here" dealers. With such dealers, as long as you have a job that provides regular income you can get an auto loan. The downside to these dealers is that they charge very high interest rates because of the risk that comes with guaranteed approvals.
Dealer Tips
When working with a dealer, negotiate all of the terms separately. Negotiate the price for the car and negotiate the price for the trade-in. Then negotiate the terms for the financing. Dealers sometimes try to bundle everything together and make more profit. Avoid financing extended warranties and insurance when the interest rate on your loan is high. You may acquire them separately without paying interest.
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