The Dos and Don’ts of Buying a Car with Bad Credit
Buying a new car can be very expensive. It can be very costly for most people, so it’s going to be a lot tougher to do if you currently have a poor credit score. If your credit score isn’t doing that great at the minute, you might find that you get turned away for car loans and it could also be impossible to get accepted onto a car dealerships credit scheme or payment plan. You might end up thinking that there is no chance of you ever getting a new set of wheels when your credit is in such a poor state.
However, you don’t have to get so upset about this. In fact, it can be possible to buy a new car even if you do have bad credit. There’s just a few hoops you need to jump through first. These dos and don’ts will help you get into a better position so that you can buy a car!
Do Look For A Used Car
There is no point looking at any brand new cars as there is no way you will be able to afford them. There’s also no way you will be accepted for any financing for them with your kind of credit. You will have more chance of being able to afford cheap used cars as it will be easier to get a loan or payment plan for them. One of the main reasons people with bad credit keep getting knocked back if you continually keep trying to buy expensive cars.
Don’t Ignore The Current Interest Rates
If you will need to take out a loan to be able to afford a new car, it is crucial that you keep an eye on the current interest rates. These will affect the final price you pay for your loan. It’s possible to check the average interest that is usually added onto loans for vehicles online. But, generally speaking, it should be in line with the national average rate set by the bank. Unfortunately, as you have bad credit, you will likely have to pay over this average, which will make the loan a lot more expensive for you. But if you have a general idea of what the average rate is, you will be better equipped to shop around and find the best type of loan for you, even if it is slightly more expensive because of your poor credit rating.
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Do Set Yourself A Budget
Before you do start looking at cars, it really is important to set yourself a budget. That way, it is very clear to you how much you can afford to spend on your car. Sticking to this budget will prevent you from falling any further into debt and making your credit rating even worse. One way to figure out your budget is to take a look at how much money you have left over at the end of the month. Once you have used this to pay off your current loan repayments, how much do you have left to play with? This is how much you can afford to put towards car loan repayments. Even if you do get approved for a loan with larger monthly repayments, it’s best not to go for it as you might end up struggling to repay it. And that will only make your credit even worse.
Don’t Ignore Your Credit Before You Go Car Shopping
You might be tempted to bury your head in the sand when it comes to your credit rating. However, that isn’t a very good strategy at all! Ideally, you should start to try and improve your credit score before you start looking at any cars. That way, you might end up in a better financial position once you start your car hunt, which will make you a lot more likely to be approved for all kinds of auto finance. So, how can you improve your credit rating? Well, first of all, you need to start repaying all of your loans and paying off your credit card bills on time. Once you start paying off your current credit in a timely manner, then your score will start to improve significantly. It’s also worth looking at your credit profile and checking for any errors in your personal details. These can often slip through the net and go unnoticed. However, if one of the financial organizations spots them, then it could damage your overall credit rating. As well as all this, you shouldn’t apply for any other form of credit just before you want to apply for a car loan.
Do Try And Get Pre-Approved
It can sometimes be possible to get pre-approved for loans and other forms of financing. This will, as you can probably tell, greatly increase your chances of getting approved for the actual loan itself. To do this, you just need to go to your bank and ask how much you would be able to lend from them. They will give you a credit limit and pre-approve you for a loan. If your bank won’t lend you any cash, you might need to go via a financial advisor. Once you have your pre-approval, you should be ready to start the application process for your car loan.
Don’t Buy Extra Features
When you do finally get to a dealership and start looking at potential cars, I am sure that the dealer will try to convince you to add one some extra features to the vehicle. Of course, these will all come at an extra price. So, you need to figure out how much, if anything, you can afford to spend on extras for your car. Ideally, you should try and keep this expense down to a minimum. In a perfect world, you wouldn’t buy any of them at all, but you might end up persuaded to add on some practical features, such as ones that improve the vehicle’s safety!
Hopefully, all of these tips help you get a car despite your bad credit!