10 Tips Everyone Should Know About Buying a Car with Bad Credit
Bad Credit means a poor credit rating, i.e. a condition in which a person or company will not be given loans easily by banks and other lending sources. This happens commonly as a result of declared bankruptcy, skipped payments, late payments or exceeded credit card limits. If you want to buy a car in spite of having a bad credit history, your options are limited, but they are there. It is not as if there is no option as there are companies that can provide auto financing without the need for expensive buy here pay here financing.
1) Be Realistic
The first thing you need to do is to clear your approach – you want to buy something when your financial position is not the best. This means you must draw a line somewhere in the back of your mind as to how good a deal you are likely to get. Many people get frustrated because they expect a deal that is better than their current position.
2) Know Your Credit Score
This may cost you a little money, some 30 or 40 dollars, but can save you hundreds in the final analysis, it will give you a clear idea of where you stand and give you the confidence to deal with the car dealers and prevent them from giving you a bad deal. You know your position and if the deal is below it, you can simply walk out of there.
3) Look for Bank Loan
This may be difficult, but not impossible. A bank loan will improve your bargaining position. Get the loan before you go for the purchase. This will also prevent them from inflating the deal value by citing gap insurance, extended warranties and the other extras that you don’t really need.
4) Dealer Financing
If your credit rating is very low, then you will have to go with the car dealer’s finance. An advantage of this is that these dealers have a vested interest in you purchasing the car. So the deal will be completed quickly. The dealers and the banks they work with will also be more flexible and better prepared to work with low rated borrowers like you. The problem is that you will have to pay a higher rate of interest.
5) Peer-to-Peer Financing
Online options for this route of financing are available and are worth checking in case nothing else works.
6) Documents
When you sit down for the loan or the car, be ready with a set of documents. This will speed up the process and demonstrate your seriousness. These documents typically include copies of a paycheck, driver’s license, electric bill / phone bill as an address proof, references and possibly a co-signor.
7) Be Confident
When the dealing starts, be up front and visit them personally with the realistic down payment you can afford. This is bound to impress them and convince them that you are not concealing anything.
8) Refinancing Options
If your repayment record is the best, you can ask for a lower rate of interest after 6 to12 to 24 months. With a good record, you can also approach a bank for such as refinancing.
9) Closing Precautions
Be realistic during closing. Don’t fall prey to dealers who claim to provide you with car with zero down payments. Such dealers usually have something nasty to their sleeve.
10) Maintain Your Credit Score
The last thing you need before closing a deal is another loan gone bad with negative effects on your credit score.
You can buy a car with bad credit without resorting to buy here pay here car lots. Learn more at http://www.BuyingCarswithBadCredit.com.
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