Getting a car is not that easy. It is one of the most expensive investments you can make, just like when you invest in a house or a property. It becomes even more difficult when you have a bad credit score. But don’t lose heart. There are still a number of ways for you to get that dream car even when you don’t have a good credit score.
There are still car loans that are made available for people with bad credit. You just need to know the steps to take and be careful when you do your shopping so that you don’t end up making the wrong decision.
Here’s a helpful guide you can follow to finance your car even with a low credit score.
1. Check your credit score.
Before anything else, it is important for you to be aware of your credit score. Many people make the mistake of jumping right into shopping without even being aware of their credit score. It is important that you do not make decisions based on your assumptions. Aside from knowing the figures, it is also important to find out the reason behind the bad scores so that you can do something to improve them next time.
2. Assess your finances.
After finding out your credit score, the next thing you check is your finances. You will have to find out how much budget you have at the moment and the amount that you will need in addition, especially when you are applying for a loan. You also have to determine how much you can afford for the monthly payments for the car and take into consideration the other expenses, including regular maintenance, insurance, and repair. It is also advisable to make a bigger down payment so that you will pay less interest, and you will also be required to pay smaller dues on a monthly basis.
3. Shop for auto loan rates.
Now that you already have a budget in mind, it is time to shop around for auto loan rates. Don’t settle with the first you can find. It is important to take the time to shop around so that you can compare which one offers the best rates. Also, explore all the financial institutions that can help you out.
4. Consider the length of your loan.
When deciding on the number of years for your car loan, you have to remember that the longer it takes, the more expensive the amount of the car that you will pay. Do not dwell on how cheap the monthly payments are going to be. Focus on the total amount of the car, including the interest, based on varying timelines. As much as possible, stick with the one with the shortest term, because it will have the least impact on this expense. This is especially helpful when your goal is to save money.
5. Wait for a few months before making the final decision.
If purchasing a car is not something that has to be very urgent, then maybe you can still wait a few months or put it off, especially when you still cannot afford the dream car at the moment. You might still be able to do something to improve your credit score, or you can still save a little more cash.
6. Choose newer car models.
Used cars may be less expensive at the moment of purchase, but you have to consider the additional expenses it will incur in the future because of the fact that it is not brand new. You may need to spend extra for repairs and for maintenance. If you choose used but newer car models, there’s a good chance that you will have fewer headaches in the future.
7. Make additional payments.
When you get to have extra cash and if it is possible to add more to your monthly payments, the better. It is always a good idea to get the loan paid quicker because it means less interest. If you have to cut down some items that are not really that important from your monthly budget, then you may have to do it.
Also, please check this related article about How to Finance A Car with Bad Credit