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Getting Car Financing When You’ve Got Bad or No Credit

Need to get approved for a car loan despite a less-than-perfect past? A car is a necessity for the vast majority of people nowadays. Not everyone lives in a metropolitan area that has public transit.  If you’ve got poor or no credit, a car loan may not seem so easy to get. Car loans can be huge. Car loans can have big interest. And not making your payments on time will result in big trouble for you both now and down the road. So, what can you do when you NEED a car and have credit problems.  Read on:

High Risk Car Loans

There are high-risk car loans places that will finance cars to people with poor credit, no credit, people who are self-employed, bankrupt, or have had a reposession of a car in their past. Be prepared for higher costs and some other factors as well.

Interest Rates

People with solid credit can often be approved at 0-10% financing. The better qualified you are, the lower your interest rate will be because for the car dealership, it’s all about risk management. Low risk can equal low interest.  High risk can mean anywhere up to 30% interest rates. Shop carefully before you sign on a dotted line and overpay for a car!

Down Payments

If you’ve got great credit, a down payment is typically not an issue. In some cases, car dealerships are even willing to let you drive away with $0 down. If, however, your credit history is less than stellar, you can expect to have to pay from a few payments to 1/3++ of the cost of the vehicle.  Worried you won’t get approved for car financing? The answer is almost always a sizeable down payment. Yes, a co-signor can help but walking in with a wad of cash is most often the ticket to getting approved.

Admin Fees

Some places that finance bad credit auto loans will also charge additional fees. Be sure you’re aware of what you’re signing up for. The fees could be worthwhile for you but do shop around.

Credit Boosting

A great way to boost your credit is to make payments on time to a car financing company that reports to credit bureaus. Do be sure you can afford to make payments because that monthly report could boost your credit score. On the flip side, you don’t want to go from bad to worse by over-extending yourself.

Beware of *Bad* Bad Credit Car Loans

Some bad credit finance scenarios are severely over-priced. Be sure you’re getting a sound vehicle that will outlast the payment plan! Don’t be tempted to take a car you truly can’t afford, in the hopes you’ll get through things “some how”. Make sure you’re at a comfort level with your budget that allows you to drive, buy food, pay bills, keep the car insured, and put gas in it.

If you’re buying a vehicle as a way to improve your credit score, be sure you deal with a financing company that DOES report your on-time payments. Not all private financiers take the time to do this. If self employed, car loans may not seem easy to get but produce proof of your income (and probably your last few years of tax returns / assessments) and produce a sizeable down payment and you could get the approval you seek.

A car could be useful for you, it could even be essential for you. You do have buying power, even without a perfect credit history so shop around, read the fine-print, be sure you’re buying into a good deal, and use cash to leverage yourself.

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