It takes just three little digits, also known as your credit score, to show how likely you will pay your debts on time. According to Vantage Score, a very poor credit score ranges from 300-579. Whereas the best credit score you could ever have is between 800-850. If you have a bad score, chances are you’ve probably experienced loan rejections, difficulty in buying and renting homes, and even getting a cell phone contract. So you might be on the fence about making purchases, especially now that you realize you need a car. Can you even get finance for a car? It’s not impossible, but there may be some risk involved. Here are four ways that you can buy a car despite your bad credit score.
1. Get a Family Loan
If you don’t have a good credit score, it’s not always your fault. Perhaps you’re only just starting your credit journey, and eventually, you will slowly build up your score. So if you have a low score and you need to make a large purchase, like a car, you should look into other means of acquiring money to finance it. If possible, get a loan from a close friend or family member who is in a better position to help. If they know and trust you, they might be willing to give a loan with an interest rate and more flexible repayment options that are comparatively lower than what a bank or credit union might offer. Besides, the interest rates will eventually benefit your friend or family as a bonus. But be careful because lending cash to loved ones always ends badly for nearly half of Americans, so it’s best to be upfront and honest about your repayment schedule.
2. Get a Co-Sign
Applying for your own personal loan to finance a car with a bad credit score might not get you anywhere. Your application might get rejected, or the interest rates will be too high because of the risk involved. However, with a co-signer, you will have the chance to use their credit score to make you look more reliable. If you default in your repayments, your co-signer will be responsible, so it rests on you to ensure that your repayments are made on time.
3. Shop Around for Auto Loans
Auto loans are made available for a very specific purpose – purchasing cars – so indeed it is possible to get an auto loan despite your bad credit. Some auto loan dealers may assess your financial situation using a different method than traditional banks. This way you may stand a chance in getting approved for a car loan. This is why it is important to conduct a lot of research, prior to your loan application, to help you make an informed decision. Loan companies such as New Roads Auto Loans mainly specialize in fast track auto loans for individuals with credit problems.
4. Take Advantage of Special Dealer Financing Offers
Car dealerships often offer promotions that also allow people with little to no credit the chance to also pay for a vehicle in installments. Of course, this varies for every car dealer. You should conduct your research and make inquiries to know what they might need from you. You may be in luck and land a good deal.
It’s not easy buying a car with a bad credit score, but that doesn’t mean it’s impossible. Once you finally get onto the ‘credit ladder’ be sure to manage your credit responsibly. When making repayments, pay more than the minimum when possible. Try to get your finances in order by monitoring your credit score from time-to-time and seek to rectify and discrepancies. Strategies like this will set you on the right to improve and build your credit score steadily over time.