Best Used Car Options if You Have Bad Credit
Have you had credit challenges at any point in your life? Chances are good that if you’re like most people, the answer is “yes.” Depending on the severity of the issue, a bad credit situation can be a nuisance; or in some cases, it can be a life-changing event.
If you’re one of the people who fall into the “life-changing event” category and you’re looking for a used car, it’s likely that you’ll run into roadblocks. But it is possible to buy a used car with a bad credit score.
Before you go out to buy a used car with bad credit it will be to your advantage to work on a few things first.
#1: Get a Job
Yeah, this sounds like a no-brainer, right? But for some strange reason, people don’t want to loan money to folks who don’t have a job. If this is you, get busy and get a job now. You’ll need to be able to show that you have a steady income before anyone will trust you with a car loan. Make sure you keep all your pay stubs so you can show them to finance people when you go ask for a car loan.
#2: Work on Your Credit Score Ahead of Time
Do a little work on your credit score before you go out to buy a used car. Here’s where to start.
Check your credit report ahead of time. Make sure you know exactly what you’re dealing with. We know - it’s your life. But many people have no idea what’s on their credit report. Everyone is entitled to one free credit report per year from any of the big three consumer credit reporting agencies (TransUnion, Experian, and Equifax), so you have no excuse not to take this important first step.
Close old accounts. If you have open accounts that no longer have a balance, make sure you contact the creditor and get those accounts closed. Finance officers don’t want to see open credit lines on your credit report. It gives them the heebie-jeebies.
Be on your best behavior. If you’re considering a used car purchase anytime in the future, be on your best behavior from a credit standpoint. Pay your rent or your mortgage on time every month. If you already have a car that you’re making payments on, make sure those payments are made on time. Don’t apply for any new credit cards or open any other accounts. That’ll just make things harder for you.
#3: Make a Budget
Yes, it’s kind of a drag, but also kind of a responsible thing to do. Make a budget for your household. List your total monthly income and subtract out all of your monthly expenses to see what’s left. This is important to do before you go used car shopping. You have to know how much of a payment you can handle, or you’ll put yourself in a worse situation than you’re already in.
#4: Get Pre-Approved
The loan process will go more quickly if you can get yourself pre-approved for a car loan ahead of time. Visit your local banker and talk with him or her about your situation. It may be that you’ve done enough work on your credit score that they’ll be happy to lend you money. If not, there are other options, like bad credit car loans from a buy here pay here car dealership. More on that later.
Now it’s Time to Shop.
Once you’ve cleared the hurdles above, it’s time to go shopping! Looking for a used car is fun, but it can also be stressful. If you’re trying to buy a used car with bad credit, check out these options first.
#1: Traditional Car Dealership
Traditional car dealerships usually have a great selection of used cars of all makes and models. You’re likely to find a wide range of prices, too. Walk the lots and pick out the ones that you think will fall within your budget (remember that budget you made?). Then talk with the loan officer to see if you qualify. Remember that car dealerships often have stringent rules around who they loan money to. Based on your credit history, you may strike out here; or if you’re approved, you may pay much higher interest rates than the average consumer with a higher credit score will. Make sure you pay attention to those details.
#2: Local Nonprofit Agencies
Many cities have nonprofit agencies that offer used cars to low-income or bad credit residents. They may be free or offered for sale at a minimal cost. You may be eligible for a used car under one of these programs if you qualify. One such program to check out is Wheels to Work by Goodwill Industries. Talk with local agencies in your area to see if they offer used car programs for people with bad credit.
#3: Buy Here Pay Here Car Dealership
A buy here pay here car dealership is often the best option when it comes to buying a used car with bad credit. These dealerships specialize in helping people with bad credit get into reliable transportation that they can afford. They do this by making and carrying the loans themselves instead of farming them out to a bank. At a buy here pay here dealership - AutoMax of Henderson, NC, is a great example - you’ll find people who understand that bad credit often happens to good people. The qualification process for a bad credit car loan is typically quick and easy; you’ll only have to answer a few simple questions and prove that you meet the income qualifications (this is where that job comes into play).
AutoMax Wants to Help
If you want to buy a used car with bad credit, the folks at AutoMax - serving Youngsville, Henderson, and the Raleigh-Durham metro areas - can help. They’ll walk you through the bad credit car loan process, take you out to scour the lot for cars that fit within your budget and get you set up with a vehicle that has payments you can afford. Stop in at one of the AutoMax locations nearest you to talk with them about your situation. They’ll show you how you may be able to start rebuilding your credit score with a bad credit car loan from AutoMax.