Bad credit auto financing can be tough, but it’s not impossible. A car loan is a major item in your financial profile, and your car loan payment will probably take up a considerable portion of your income. If you think you need a new car and have a flawed credit history, read on for some tips.
Consider the timingIf your car is running well, but you have bad credit, now might not be the best time to take out a car loan. If you can wait a while before you get a car loan, you can put yourself in better financial standing. Even waiting a year or two can greatly improve your credit score, if you are committed to bettering your credit habits. If you can wait and be diligent about managing your money, when you do get another car, you can get a loan with more attractive rates and terms.
Shop aroundIf you must get a car now because yours needs extensive repairs or won’t run at all, you should take the time to shop around for your financing options. Chances are, if you take out a bad credit car loan, you won’t get the lowest interest rate or the highest limit. Talk to different lenders and see who will give you the most affordable rates and terms so that you can manage your purchase and not worsen your credit rating.
Clean up your financesYour bad credit is fixable, as long as you are diligent about managing your finances. That means paying your bills on time, paying down your debt and not making impulse buys you can’t afford. Also be sure not to open unnecessary credit accounts. If you can improve your credit score, you may be able to refinance your car loan so you can take advantage of better loan features.