Many people allow bad credit hold them back from buying a car or at least buying a car in a smart way. This is because many people go into car buying with bad credit believing that the best they can do for themselves is by taking up any offer that comes along. The problem with this is that many people with bad credit are taken advantage of for this reason. Plus, there are many options for car buying even with bad credit that many are not aware of. Here are the three steps you should take when you know you have bad credit but are looking to buy a car:
- Check Your Credit Score: Checking your credit score is important for anyone, even those with decent credit before making a large purchase on credit. This is especially true for those with bad credit though. Fixing even the smallest of errors can make a huge difference in your score. On top of this, you might find small things that are easy enough for you to fix before you start on the process of car shopping. Improving your credit score even slightly could put you in a different range and help significantly in the process of getting approved for a car loan.
- Apply for a Secured Loan: If your credit is still in too much damage for you to receive a traditional car loan, your next best option is to apply for a secured bad credit auto loan. This allows you to use collateral in order to be approved for the loan. Of course, you will need something that can be put up for collateral. However, you must be really careful that you are making your payments on time, otherwise whatever you put up for collateral will be repossessed, even your home. Many times, using your home as collateral though improves your chances of approval simply because the bank will believe that you will be more responsible with your payments.
- Talk With a Dealer: If you are having trouble getting approved for a loan, the next best thing to do would be to talk with a dealer. Dealers specifically deal with people looking to buy a car with bad credit everyday. They will be able to provide you with more options that you may not have thought of yourself or there is a chance that they will have a program you can apply for there that can help.
With these three steps, you are well on your way to getting a car even with your poor credit. From here, you can continue to make payments in order to improve your credit over time.