How to Buy a Car With Bad Credit

When you're trying to figure out how to buy a car with bad credit, you need to know where you stand as far as your credit is concerned. You should find out what your credit score is. You may have to purchase a report. A $30 or $40 fee may not be something you want to pay right now, but it can pay off in the long run by saving you hundreds on your car deal. You can also get a free credit score by signing up for a trial offer at freecreditreport.com, but know that you'll need to cancel their credit monitoring service in the first week or you will be charged.

You want to be able to walk into the dealership with confidence even with a less than perfect credit history. Remember, no matter what the salesman says you ultimately have the upper hand since you can simply walk out and likely find a similar deal somewhere else. They may seem intimidating, but they want your money as much as they want money from someone with perfect credit.

One way to increase your confidence and negotiating position is to get a loan from the bank. Then you can walk into a dealership with cash and walk out if you don't like the way it's going. A huge plus to first getting your loan through a bank is the fact that they don't up-sell you on gap insurance, extended warranties, and all the other extras you don't need.

If your credit score is very low, then outside bank financing may not be an option. Your only choice would be dealer financing. However, the excessively high interest rate they charge you doesn't have to last forever. After 6 months of on time payments you can likely refinance at a lower rate with a bank. Even though they may have told you no before, you have now proved your ability to make payments.

There have been a few online lending options that have been developed. With these, you can get a loan from several people who trust you to pay them back over time, even if your credit is bad. With a lower credit score, you'll need to pay higher interest, but it's worth looking into if you can't get a bank loan.

Some sites to look at:
www.prosper.com
www.lendingclub.com

It can be frustrating to try to fix severely damaged credit. You need a car to get to work to earn money to make your payments, yet can't qualify for credit to buy that car. One viable option is to go to car dealerships that have in house financing or in other words, buy here pay here car lots.

The primary advantage to in house financing at a car dealership is that they have more of an incentive to offer financing because that means they also make a sale. So getting a car loan is typically much easier with buy here pay here car lots. It can also just be more convenient to have one company as both the car dealer and the lender. Another advantage is how fast the financing happens. Usually with an outside lender, which is what most car dealerships use, the long drawn out financing process can hold things up. With in house financing you can be approved and set your loan up very quickly.

There is one unavoidable disadvantage to purchasing from a buy here pay here car lot is higher interest rates. Unfortunately, that is something you have to do with when your credit is very poor. But, overall when it comes to buying a car with poor credit, buy here pay here car lots are a decent option.