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Tips for Buying a Car with Bad Credit

Speaking as someone who's been there, done that, and survived to tell the tale, these tips for buying a car with bad credit will save your butt.

By Skunk UzekiPublished 6 years ago 7 min read
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True story: back before I had a credit score of 750, I was a person who had serious financial struggles.

My ex caused me to lose my job. I just had my only child and was too sick to work. I had to default on loans in order to make sure that I had enough cash to feed us. At my lowest credit score, I had around a 525. That's really, really bad.

As I tried to rebuild my life, I had to get a new car. That's not a good thing in the least bit either. However, I quickly learned a lot of important tips for buying a car with bad credit that served me well—and my car is now almost entirely paid off.

Speaking as someone who's been there and done that, I know life has a tendency of throwing us for a loop. These tips will, at the very least, help you stay on the road while you start rebuilding your life and finances.

The most obvious rule of car-buying still applies.

Though there are a lot of tricks and tips for buying a car with bad credit, none are as important as affordability. Simply put, you should never buy a car that you won't be able to afford paying off on a monthly basis.

Many of the biggest mistakes people make at a car dealership is letting a salesperson badger them into buying a car that really isn't in their budget. Folks with bad credit tend to have the worst luck with this, too.

One thing that people don't really tell you is how quickly auto loan companies will move to repossess your car. I've had friends who've had their cars repo'd after just one single missed payment. You really can't take chances on this stuff.

If you think that a certain monthly payment or price is a "stretch," then don't buy the car. Your car will not do much good for you if it ends up being repossessed.

Try to find an auto loan on your own first.

Most car dealerships make money by adding on fees to your used car loan, and that's not good for your wallet. If you want to buy a car from a dealership, it makes sense to shop around for a loan first.

This will allow you to get a better idea of what interest rates are normal for your credit score and will also give you an idea of how much car you can afford. Shopping for your own loan will cut down fees and open you up to better deals, too!

Looking for your own loan will also require you to check your credit score, which is pretty empowering. In some cases, you may get a pre-qualification letter—which would allow you to pick the car you want to buy and where you want to buy it.

In my case, I was lucky enough to wait a month or two before my old car was on its last wheels. Having worked at a credit repair company, I knew what I had to do to get my credit score improved as fast as I could.

One of the best tips for buying a car with bad credit is to use an app like Credit Karma to dispute negative marks on your score for at least two to three months before you hit up dealerships. This can improve your score by as much as 100 points.

If they don't erase your marks, keep trying. In the meanwhile, paying down the debt you have on your credit card will help you get a rapid boost in credit. This is because a large percentage of your score is based on how much debt you have left to pay.

A better credit score, even by as little as 20 points, can make a huge difference in your car buying experience. Trust me on that.

Offer up a better down payment.

Though this isn't necessarily one of the lesser-known tips for buying a car with bad credit, it's one that deserves to be pointed out. When you're gearing up to buy a car, the best way to ensure that you will be able to actually walk out of there with a car is to have a hefty down payment available.

Your FICO score is not the only element lenders take into account when approving you for a loan. Your income and down payment matter too. A good down payment, even of as little as $600 to $1,000, can be enough to get you a car you'd otherwise be turned down for.

If you're low on money or have shaky income, a higher interest rate may actually be better for you if it means a longer payment term.

As much as people want to say that a loan should be best with lower interest rates, reality can be a surprise. If the only way you could afford to pay for any car is to have a high-interest loan that spans the course of five years, that's what you might have to do.

Counterintuitive as it may be, this is one of the smartest tips for buying a car with bad credit and a low income. It can even save you from having your credit score drop even more.

Though it may be a rough maneuver, it's often better to get a lower payment that you can afford than it is to get a high payment that will "be over quickly" with the hope that you can somehow make ends meet.

Don't give business to a dealership that gets rude with you over your credit score.

When you have a good credit score, everyone wants to do business with you. It's just second nature in the business world. When chips are down, that's when people tend to show their true faces.

This isn't so much one of the tips for buying a car with bad credit as much as it is a matter of pride. Just because you don't have good credit doesn't mean you should let sales staff bully you or make you feel like you have no other choice for dealerships.

If you notice an attitude, get up and leave. You deserve better than that, and probably will be able to get a better deal elsewhere.

"Buy here, pay here" dealerships are usually predatory and should be used as a last resort.

Oh, I can tell you some horror stories about these dealerships. I know them because I've seen people who have used them and saw the kind of "deals" they get.

These dealers typically go after people with bad credit knowing they can't pay back loans. They jack up interest rates, have people put down a payment, and then when they miss a payment, immediately move to repossess the car they bought.

Unless you have a credit score of 300 and can't get a loan anywhere else, don't go to these kinds of dealers. They can and will do what they can to screw you over.

In some states, you might actually be able to get a car through a car ownership program.

Perhaps one of the greatest tips for buying a car with bad credit I've ever heard was one that I didn't actually use. Shortly after I ended up buying my car, I found out that states actually have sponsored programs that allow people with bad credit and low incomes to buy cars.

I was floored to find out that there were even programs like this available, and they still remain relatively unknown. This list of car ownership programs by state can help you get in touch with someone who can give you the car you need to drive to work.

Read all the paperwork.

One of the more cautionary tips for buying a car with bad credit involves reading all the paperwork you're given—and asking for clarification when something seems out of the ordinary. Car dealerships often will try to take advantage of people who may not know their rights.

Some dealerships will have people signing loans that are predatory, get people to drive off the lot, then call them back in to sign papers that are nothing like the terms they initially agreed to.

Generally speaking, if a deal seems too good to be true, it probably is.

Finally, consider paying in cash if you can.

It didn't feel right to talk about tips for buying a car with bad credit without mentioning this. Cash is, and always will be, king.

As such, the best way to avoid all the pitfalls of buying a car with bad credit is to just pay for a car in cash—even if the car itself isn't that much of a looker. At the very least, it'll ensure that you don't end up further in debt.

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About the Creator

Skunk Uzeki

Skunk Uzeki is an androgynous pothead and a hard partier. When they aren't drinking and causing trouble, they're writing articles about the fun times they have.

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