To many people, bad credit scores are one of the most common financial impediments that this generation endures. To a certain degree, bad credit can really make life much harder when you’re trying to stabilize it and make progress. Unlike many other types of financial history, credit history is very hard to overlook when it’s set in stone and shared around banks across the country. This can be especially problematic for those trying to finance a car. However, you shouldn’t lose hope because no matter how many doors close, you’ll be able to find a window. Lenders try their best to assess the risks associated with giving out title loans to consumers; these risks are defaulting, bankruptcy, and repossession. Based on these facts, you’ll find a few simple, yet efficient, ways to finance a car with a bad credit score in our simple guide.
If bad credit is chasing you into a dead end with no way for you to improve it, it’s time to find a lender or a dealership that can accommodate your budget. Finding a car is easy, but finding a lender that will give you reasonable rates is hard. This doesn’t mean that there are no lenders willing to look past your score. The financial advisors at BirchwoodCredit.com explain that any individual can finance a car at reasonable prices even if they have a bad credit score. In-house lenders will provide you with the best rates, not to mention a much higher approval rate than other alternatives.
Enhance Your Score
This may sound easier said than done, but you wouldn’t believe how easy it is to enhance your score in some cases. Before you rush to a car dealership with a bad credit score, check your credit report as soon as possible. You’ll get a full overview of the items or problems affecting your score. You should try to clear up any past-due payments, dispute errors, and use all the tools in your power to give a positive spin to your credit score. While you may find many dealerships willing to deal with bad credit, they’ll probably use it to twist your arm to get you to accept deals with interest rates way above average; improving your score will provide you with more leverage during negotiations.
Find a Co-signer
A co-signer doesn’t have to be someone with an excellent credit record, but as long as they pay their bills on time, they can be of great help. A co-signer is someone who is included in the contract, carrying the same weight of responsibility as you are. If you default on your payment, the dealership or bank will pursue the co-signer to cover the payment. This is a very dangerous option for those who aren’t completely sure that they’re able to pay their bills on time. It’s important to note that this could also ruin relationships, as the stakes may be a bit too high to ignore. If the arrangement works and you’re sure of your payment punctuality, then you’ll be able to get great deals by using a co-signer to help you out.
Place a Bigger Down Payment
If there’s one thing that can make car dealerships rethink their position on bad credit score, it’s big down payments. Sometimes it’s worth shelling out a few extra bucks to get yourself on a dealership’s good side. Since this will be your main means of transportation, it’s a priority that may be worth investing some of your emergency savings in. Lenders and dealerships can extend your payment scheme and provide you with superior interest rates if you are willing to go the extra mile and pay a sizeable down payment.
Stick to Your Budget
A lot of people may get hung up on a single car that they’ve wanted to get for a while. But bad credit scores can leave you with limited options. You should avoid exceeding your budget so you don’t end up with bills that you can’t pay on time, worsening your credit score even more. Since you’ll probably want to put a bigger down payment to get better interest rates, more expensive cars will force you to go out of your way in terms of financing. Focus on practicality and punctuality to ensure that you don’t get squeezed by debt, and to ensure that you’ll be able to improve your score with time.
A bad credit score can be a real hassle when you’re trying to turn your life around. While it’s easy to despair over it, working your way out is the best viable solution. There is no shortage of financing options, but you’ll have to do your own homework if you want to get the best rates and installment plans.