Bad Credit Car Tips: Securing the Best Deal
Bad credit can certainly limit your ability to get a loan for a car. Some lenders won’t even give you the time of day, while others may suggest a plan that isn’t financially feasible. Luckily, there are still several ways you can secure that solid auto loan.
Follow our guide below, and you won’t have any issues when you visit bad credit auto dealers. As you’re about to learn, many of these businesses need you as much as you need them…
Shoot for the Moon
There’s no reason to limit yourself to specific loans. We understand the logic: you’re attempting to avoid the loans that are more financially beneficial because you assume you won’t get approved due to your bad credit.
However, BankRate.com says that that point of view may be a bit shortsighted. While your poor credit may have resulted in a subprime mortgage loan, that won’t necessarily be the case for automobiles. Since these types of loans are often for less money and run for a shorter amount of time, you could potentially expect a “prime or near-prime” loan for your new car.
Similar to the advice above, you don’t want to limit yourself to one or two lenders. Explore all of the opportunities, as you may unexpectedly come across a surprising, beneficial deal. Furthermore, Phil Reed, a consumer advice editor at Edmunds.com, told BankRate that some lenders may view your bad credit as a positive.
“That’s where it becomes more important to shop around,” he said.
However, on the flip side, you’ll want to be wary of these lenders who only hand out loans to subprime customers.
“Seeing places that are appealing specifically to subprime is a little bit of a warning flag,” Reed noted.
Where do you start? The experts suggest exploring your local options, like a bank or credit union. You’ll have a better chance at a bank where you already have a checking account. Furthermore, BankRate.com suggests seeing if your employer or insurance companies will offer any automotive financing.
Finally, the website recommends targeting businesses that are known for handing out auto loans (as opposed to those who cater to “low-credit clients”).
Bring a Friend
Consumer attorney Yvonne Rosmarin told BankRate.com that it’s best to bring another person when you’re shopping around for auto loans. There are two reasons for bringing along a partner. First, you can rely on this person as an “extra set of eyes and ears,” and if they know anything about credit or loans, they can give you some unbiased insight.
Furthermore, this person can help play a “role” during your negotiations. The website suggests having your friend act “unimpressed, dubious, or critical” of the loan, which may influence the lender to offer better rates.
As we’ve outlined above, there are several ways to snag a beneficial car loan, even if you have bad credit. You certainly shouldn’t limit yourself to only a couple of lenders, and you shouldn’t be settling for anything less than the best possible deal (although, with bad credit, that’s going to be difficult). Use our guide above, and you shouldn’t have any issues securing the best possible payment plan.