Buying a car is never easy, especially if you have bad credit as it can make it difficult to buy a car but there are ways to get car finance when you have poor credit. It is important to reach out to a reputable bank or lender to see what options are available for getting finance on a car instead of automatically accepting a high interest rate. Here are 7 ways to get car finance with a low credit rating.
1. Ask yourself do you really need a new car
Before you start shopping for a car and finance options, take a closer look at your situation and decide whether its absolutely necessary to get a car. Are there other options to follow in the mean times such as using your current car, carpooling or even using public transport for 6 months to a year to rebuild your credit.
2. Examine your credit report
Ensure that you perform a free credit report check once every twelve months. Don't just take a dealerships claim that you have bad credit, see for yourself what your score is, what is affecting your score or if there's any suspicious activity on your report so you can see how you can rebuild it. It's a good idea talking to any potential lenders about your credit history especially if you have any specific negative activity which you have a good reason for. Some lenders may be willing to work with you depending on the reason for your low credit score.
3. Look at a shorter loan period
It may be a good idea to look at getting a shorter loan period as the interest rate will generally be shorter meaning you will end up paying less for your car overall.
4. Choose a specialised lender
Whilst there are many lenders out there it is best to apply to one who is an expert in car loans such as Money Barn as they are more likely to get you a more beneficial offer as they're used to dealing with the car loan process and used to giving loans to people with a bad credit history.
5. Make sure you can afford the repayments
Ensure that all of your finances are in order and cut any unnecessary costs. If you feel that your income or expenses may have a negative change its a good idea to think about buying a cheaper car or perhaps looking at a longer repayment schedule. It's advisable to not fall behind on your payments and not paying back your loan as it could not only result in repossession but you may end up in bankruptcy.
6. Counter your poor credit with a co-signer
It may be easier for you to get a car loan if you can find an adult with good credit who will agree to co-sign the loan for you. Some lenders will allow a co-signer who then takes on the responsibility of paying your loan if your fail to make timely or regular payments.
7. Rebuild your credit rating
Getting a credit card can help your rebuild your credit by allowing you to set up a consistent repayment history. Set up a couple of purchases and show that you can pay it off every month. By paying your bills on time this will also help you build a higher credit.
Do you have any tips on getting car finance with a low credit rating?