If you have a poor credit rating, buying a used car can be frustrating. When you find a vehicle in your price range and in good condition, you might think that your bad credit rating will count against you. The fear is not unfounded; many people with bad credit report problems when trying to buy a vehicle. However, several excellent resources can help you with the process of getting financing for your purchase.

Get Pre-Approved

Start by finding a lender who will be willing to guarantee funds up to a certain amount. If you have the time and patience, get several quotes from different lenders so that you have the option to find the best terms for your budget. Some may offer a lower rate but a higher payment over a shorter timeframe, while others may offer a higher interest rate but a lower monthly payment over a longer term.

You can negotiate directly with a finance company or get pre-approved by your bank or credit union. Your overall payment is likely to be lower than you would have otherwise paid with no pre-approval.

Keep Costs in Check

If you are in a situation where you have bad credit, you probably can’t afford to comfortably take a big loan. Because of this, the most important thing to do is to make sure you add up all the costs of buying and owning your used car before buying it.

One good way to do this is to look at the maintenance schedule for the model you want by mileage. If your timing belt or chain needs replacement near the mileage that the car has, for example, look into whether this has been done or if you’re going to need to pay for maintenance soon into owning the car.

Make sure you consider extra charges, such as registration and maintenance fees, which can increase your monthly payment. To be sure that you are paying a reasonable cost for your used car, look at online cost estimates for the make, model, and condition of the used car you are considering.

Make a Big Down Payment

In addition to having a smaller loan, the more that you can contribute to the cost of the car, the easier it is to find someone to finance you. Down payments show that you are also putting your own funds at risk if you don’t pay your loan off. This makes you a more reliable risk to a lender.

Raise Your Credit Score

Use a free program to check your credit score before applying for loans so that you know your score. This number may move during the process and is slightly different between the three main reporting agencies. However, the numbers are usually quite similar between the three. Some loans will advertise a range of credit scores that they serve, so knowing this will save you time when you look to apply.

If your bad credit is from a period in your life that is financially different than now, it’s possible to raise your credit score before you begin the process. You can work with online programs like Credit Sesame that make suggestions on how to pay off and close some accounts or consolidate debt in order to raise your overall credit. They will also help you to remove incorrect information from your credit report.

Actions that help almost everyone to raise their credit score include keeping your credit card balances as low as you can and making consistent, on-time payments on all debts. Additionally, your credit score is affected when you apply for too many loans. Don’t apply for more credit cards just before looking for a car loan if you are trying to preserve your score as much as possible.

Recent changes in the law have made it so that if your low credit is due to medical debt, this information can be erased from your credit. It’s a good idea to check what your new credit profile looks like with this information. If you find that your medical debt is still on your credit report when you check, speak to the reporting agency about getting this information off of the report before you begin the car loan application process.

Consider Non-profit Organizations

Some non-profit organizations offer low-interest loans to low-income earners with bad credits. They will allow you to become a member and then work with you to develop your credit rating.

If you are accepted, you will be able to purchase an automobile with low-interest payments. This means that your monthly payments will be lower than the amount due if the car got financed through a bank, finance company, or pre-approved loan.
These loans can also help you better manage your finances so that you don’t have to worry about the cost of buying a used car.

Look for Vehicle Rebates

When you buy a used car, there are many rebates and incentives you can get for all makes of vehicles. It would help if you looked for rebates that you can remove from the purchase price of your car. This way, you will be able to remove costs from your final payment or deposit.

You’ll also save money on insurance, maintenance, and registration fees when you purchase with a rebate or incentive. This will make buying a car with a bad credit score less difficult.

Consider Getting a Cosigner

This may be the best option for you if you are trying to buy a used car. You can ask a family member or a friend to help you. Keep in mind that cosigners should not be expected to pay down the loan with you. Instead, they are traditionally willing to step in only to prevent you from defaulting.

The best time to use a cosigner is when you have new credit, or you have steadily improving credit. This can help you to get a lower interest rate. Making reliable payments on your co-signed debt can also help you to increase your credit score enough to apply for your next loan by yourself.

Find a Second Chance Car Loan

Most banks and credit unions will provide you with a second chance car loan. These loans are intended to help people with bad credit. This is because they usually have a higher interest rate than other loans, but they give offers that other lenders do not, such as zero down and nothing out of pocket.

No-down payment loans are ideal for those with a bad credit rating. These loans do not require you to put down any money to get the car, so your savings can be used to make reliable, on-time payments instead. There are limits on how much you can borrow, so make sure to look into this before starting the process.

With a little determination and the right tools, buying a used car is possible even with bad credit. Take the above tips into consideration to find the best car for your budget today.