When dealing with bad credit it may seem impossible to find a lender for a used car. But there are options out there even if you have bad credit. Doing a little homework before searching for a car is important even to those with good credit, but is even more important for those with bad credit.
The most basic option for someone with bad credit looking for a used car would be to save up the cash and pay for the vehicle in full. If in the position to save a good amount of cash, a large down-payment can often times help get approval on a loan for those with bad credit.
Another option is to sell your current vehicle to a private party. Selling to a private party will get you more money for the car than trading it in at a dealership. You can then use this cash to either buy another car or as a down-payment. You could also find a private party or dealership willing to trade for your current car.
Getting a loan for a car with bad credit is hard, but not impossible. Many times independent auto dealerships can offer financing to buyers with bad credit. They will take a chance on someone even when a large dealership will not.
The easiest way to get approved for a used car loan is found on the internet. There are many websites that offer auto loans to buyers with little or no credit or those with bad credit. The most popular way to do this is through a dealer network system. On this type of site the buyer will enter some financial and personal information into the system. The system then finds auto dealers who are willing to work out a deal with the buyer based on the financial information given. Some of these sites have only a few dealerships to work with while others may have thousands of dealerships nationwide to choose from. This is a good option when you don't have a certain car in mind but are just looking for the best financial deal.
Another way to get approved for a used car loan by using the internet is by using an application service to submit in-depth financial information to multiple lenders at one time. This will often result in multiple lenders competing against each other for your business by giving you better deals. The lenders will most often contact you directly. If you have a certain car in mind, this is the way to go when wanting financing for a used car with bad credit.
An option that may take some time, but will help you in the long run, is to put off applying for an auto loan while you build up your credit score. By making all payments on time and making at least the minimum amount, your credit score should rise. Pay off as much debt as possible to free up some of your outgoing expenses. This is where many people get stuck with a car they can't afford. Sometimes lenders do not look at the amount of money being spent on mortgages and bills, they only look at the amount of money being brought in each month. This can cause you to be approved for a loan only to find out that you can not afford the monthly note due to other bills.
Lastly, look at the car that you want to buy and ask yourself if this is the car you really need. You may be able to qualify for a smaller loan amount for a car of lesser value if you were denied a loan for a more expensive car. You can compare the car you want with others in that class and may find that there are alternatives with more options and a smaller price tag.
When dealing with bad credit the best option is to save your cash and raise your credit score. Although this is option takes the longest, it may be the best deal in the long-run