How to Buy a Car if You Have Bad Credit
Having bad credit doesn’t automatically disqualify you from getting a car loan, or limit you to a loan with a crushing interest rate. There are a lot of different lenders out there, and each may have a different take on your credit situation. Some may be more willing to take on the risk than others.
If you have bad credit, here are some things you should do.
- Look around.
People who have good credit can usually get a car loan with an interest rate around 4 or 5 percent. But people with bad credit usually end up paying somewhere in the 10 to 13 percent range, or even higher. It mostly depends on what their credit score is.
But if you have bad credit, don’t feel that you have to grab whatever you can. Take some time and look around. You may still be able to find places that will give you a more favorable deal than others.
However, one thing to watch out for is lenders who deal only with people who have bad credit. They are likely to be less than reputable, and you should avoid them.
Check out your bank first, the place where you have a checking account, or your credit union, to see what kind of arrangement you can get. Also, check with your employer or insurance company to see if they offer car financing. Then, go to places that work with consumers for car loans, locations such as national, regional and local banks. Many car dealerships also offer car loans – credit financing – for people with poor or bad credit.
You obviously want to get the best deal you can – the lowest interest rate over the shortest period of time. Don’t be fooled by a lower rate that is stretched out over a longer period. In the end, it will probably be more expensive. If you have to take out a long-term loan (five years or longer), you may want to seriously reconsider buying a car.
- Get your credit score.
This should be the first thing you do. Your score may actually be better than you think, or even worse. But you need to know for sure before you go out looking for a loan. There are many places online where you can check your score.
- Take a friend along.
When you go looking for a car loan, go with a friend. You know the saying – two heads are better than one. Your friend may have a different perspective and see things you might have missed and be able to offer advice and opinions.
If you have poor credit, don’t despair: PAACO’s own credit financing program likely will be able to help you secure a car loan for one of our used cars. Visit one of our dealerships, shop online, or give us a call at 877-810-4555.