What is bad credit?
A bad credit rating usually stems from missing payments or historical financial difficulties, and it can take a long time to build up good credit. The absence of a universally defined bad credit score can make the process challenging, as the UK’s three credit reference agencies use different scales to formulate and measure ratings.
How to Buy a Car with Bad Credit
Car-shoppers with bad credit can still buy a car, but they should take a few extra steps to ensure they are getting a fair deal.
People with bad credit need to be careful to research their lenders, too. Many used car lots near Jacksonville, FL offer “buy here, pay here” loans that are not serviced through a bank or conventional third party lender.
Instead, the dealership is servicing the loan themselves, often with exorbitant interest, unnecessary fees, hard-sells on expensive warranties, and other dishonest, predatory tactics.
It is best for those with bad credit to work with legitimate dealerships and lenders to ensure they get an honest and affordable deal.
First, any increase you can make toward your down payment will offset the negative effects of your credit score in more ways than one.
When you have a higher down payment, you’ll have lower monthly payments and your interest will accumulate on a smaller balance– you’ll pay less each month and in the long run.
Additionally, when you present a lender with a larger down payment, they may be more willing to work with you despite a bad credit report. They may offer a loan when they otherwise would have turned you down, or they may give you access to better financing rates.
Bad credit history car loans explained
A bad credit car loan is a broad term used to describe a range of loan products designed to meet the needs of people with poor credit histories or others, who, due to circumstances, may find it difficult to access finance for a car from a traditional lender, like a bank.
Bad credit car loan products are ideally suited not only to borrowers with low credit scores and/or defaults, but also people with little to no credit history, part time and casual workers, the self employed and customers who are ex-bankrupt or in a Part IX debt agreement.
Bad credit doesn’t have to be a barrier to car finance and we are experts at helping people with credit issues.
What is a bad credit score?
A bad credit score can make it hard to obtain a car loan with a competitive interest rate and may also limit the amount you can borrow.
A typical credit score will fall between zero and either 1000 or 1200, depending on the credit reporting agency. The higher the score, the better!
According to this credit score table from credit bureau Equifax, a bad credit score ranges from 0– 509. A score within this range places you in the bottom 20% of Equifax’s credit-active population.
If you’re a young student, just beginning your first full-time job, or returning from a long stint overseas, chances are you have limited or no credit history at all. In this case, it’s worth taking the time to build up a positive score so that you can more easily borrow money in the future.
Simply by paying your bills on time, such as mobile phone plans and electricity, you will start to build a positive financial report. Think about setting up direct debit payments for these bills so that you always pay on time.
What to consider with bad credit car loans
According to an Experian report from November 2023, people with lower credit scores, on average, have interest rates between 13.53% and 21.18% for a used car loan and between 9.29% and 14.17% for a new car loan.
Since people with lower credit scores typically pay higher interest rates, shopping around to find the best deal before you get a new loan is especially important. If it’s possible to postpone your purchase while you build your credit, you may be able to qualify for a lower rate in the future.
But if you really need to buy a car now, there are steps you can take to help increase your odds of approval and lower your cost of financing. You can also consider adding a co-signer to your loan. It may be a good option to improve your chances of getting approved potentially with better rates too.
But not every lender accepts co-signers so make sure to check for this feature while shopping around. If you’re able, having a down payment can also help your chances to be approved because you have less to pay off on the loan.
The Best Way to Buy a Car with Bad Credit
If you’re on the hunt for bad credit car loans in the Lexington, KY area, we know you’re in the market for a car. But buying a car with bad credit is a lot different from buying with good credit. For one, you’ll find it difficult to secure financing directly from a lender, as they will judge you solely based on your credit score.
Luckily, this is where Dan Cummins Chevrolet comes in. We’ve got great relationships with lenders and work with them directly to ensure our customers get approved for great loans. To help you get started, here’s a step-by-step look at the best way to buy a car with bad credit.
Access Bad Credit Auto Loans
Some Calgary residents may have a poor credit-rating for any number of reasons. Perhaps you’ve had a hard time financially in the past and had to declare yourself bankrupt. Or perhaps you’re a student or a self-employed person for whom it’s always difficult to prove that you have a reliable source of significant monthly income.
Or maybe you’ve simply not been living in Canada for very long, and so don’t have a traceable financial history in the country. Whatever the reason that you don’t have the credit score that you ‘d like, it doesn’t have to mean that you can’t have the vehicle you ‘d like.
With an auto loan specifically intended for people with a low credit-rating, you’ll be able to access the funds you need to make your desired purchase far more swiftly and easily than you ‘d ever thought possible in the past.
Where can I buy a car with bad credit?
If your application is approved, download and print the loan packet and take it with you to the dealership to shop. Your loan documents include recommended auto dealers near you.
Alternatively, use our dealer locator to find another within our network of 14,000 dealerships nationwide. These dealerships offer high quality cars for both good and bad credit customers, with an inventory of vehicles meeting our standards for age and mileage, as well as our financing requirements.
Once you’ve selected a vehicle within the terms of your loan approval and settled the price, the dealer will work with Road Loans to finalize the deal.