A car is a major investment, and many buyers need to secure a loan to afford a new vehicle. The problem? Individuals with bad credit may feel like getting a new car is not an achievable goal. After all, trying to secure any other type of loan with a low credit score can be nearly impossible. So what is a car shopper supposed to do?
Are you currently in the market for a new car, but you're worried about whether it's possible to get the financial support you need? If so, we're here to tell you that it's more than possible. However, there are a few things you'll need to consider. Let's dive into some helpful tips that will make your car-buying journey a little easier.
You Can Buy a Car With Bad Credit, But It's Best to Wait, if Possible
If you need a car today, this isn't a tip that applies to you. However, if you simply are on the hunt for a new car and currently have reliable transportation, one of the top tips is to work on your credit first.
It's more than possible to get a car loan with bad credit. What few shoppers realize is that bad credit makes it much more difficult to get a loan with a lower interest rate. The worse your credit is, the higher your interest rates likely will be. This can present a challenge to affordability as well. So if you have bad credit and you don't need a car right away, look for credit-builder loans or other tools, like secured credit cards, to help you raise your credit score.
Once you're in range of the credit score needed to get a better interest rate, you will be eligible for a lower monthly payment, which will make your new car more affordable.
Prepare for Your Future Purchase by Saving for a Down Payment
Shopping for a car is very similar to shopping for a house. While you can get a mortgage without any money down, most people know that this isn't the most efficient way to go about it. Without a down payment, some lenders may not be eager to provide you with a loan. Not having a down payment will also mean having to secure a bigger loan, meaning that you'll pay more interest over time.
So, what's the best amount to have stashed away? While guidance will vary from resource to resource, the top recommendation is to save at least 20 % of the down payment for cars that interest you. If you can do more, this may give you even more leverage when you start to shop for a car. The more you have to offer, the less risk you present, and the less you'll have to pay on your car over time.
Don't Just Approach One Lender
When you begin shopping for a car, you won't sign for the first car you see and drive it home. So, why would you do that with your auto loan? Make sure that you talk to a wide variety of lenders or use a dealership that looks at various lending options on your behalf so that you get the best deal. Great dealerships will have a dedicated finance department that will guide you through the entire financing process.
Get Preapproved Before You Go Shopping
It's hard to know what your budget is for a new car if you don't know how large of a loan you qualify for. This is why it's a common recommendation that anyone shopping for a new car should be preapproved for an auto loan. By getting a preapproval amount from a lender, you will know how much car you can afford once you add in your down payment and trade-in, should you have one. The more you know ahead of time, the less guesswork will be involved when you're finally ready to take your favorite car home.
Look for Someone Willing to Co-Sign Your Auto Loan
A car isn't a luxury; it's something that most people need if they want to get to work or school and do essential errands, like run to the grocery store. Unfortunately, those who have poor credit or a low income may feel like they can't make their car ownership dreams a reality.
Whether you have inconsistent or low income, bad credit, or a high debt-to-income ratio, you may want to consider finding a co-signer who can use their higher credit score to help you secure a loan. Ideally, this will be someone who you trust, who knows that you can make the monthly loan payments on time. This might be more difficult than some of the other tips on this list, but it can go a long way toward helping you get a new car.
Get Financial Support and Find Your New Car at Freedom Chevrolet Chrysler Dodge Jeep Ram
A car is an essential item, like food and housing. You need a dealership that understands that. We here at Freedom Chevrolet Chrysler Dodge Jeep Ram in Virden, Illinois, are dedicated to helping area residents get behind the wheel of a new car or truck. Our finance department is here to answer any financing questions you may have and make it simple for you to secure an auto loan, even if you have bad credit.
Whether you want to jump straight to the financial application or use our payment calculator to find out how much your monthly payment will be, you can do it all conveniently from your home. Are you looking to trade in or sell your old car to help pay for your new vehicle? We have a simple KBB Instant Cash Offer tool that can determine how much your old car is worth.
Come down to our dealership today or contact us with any questions you might have about buying a new car or truck from Freedom Chevrolet Chrysler Dodge Jeep Ram of Virden, Illinois.
217-965-3327
