When you have bad credit, the last thing you want to hear is that the only cars you can afford to own are old, run down, and expensive to maintain. In these situations, it can feel like the entire world is conspiring against you, and there’s no place to turn. Banks reject you. New car dealers turn you down after pulling your credit multiple times. Employers consider the risk of hiring someone without reliable transportation. The list of the effects of bad credit goes on and on.
And that’s to say nothing of bad credit car dealerships that don’t restore your credit (note: never conduct business with a bad credit car company, or Buy Here Pay Here lot, that can’t show you that they report your repayments to at least one major credit bureau).
So how to buy a car with a bad credit score—is that even possible? And how do you get a car you actually like, when you have bad credit?
One of the first things we encourage all of our guests to do when they’re struggling with credit issues is to put together a game plan for their finances. Knowing exactly what you can afford in a car, and being able to let go of the dream of owning the latest SUV or truck, is the first step to establishing healthy buying choices and will set you up for success down the road. After all, our hope for you is that you’ll someday be able to afford that dream truck or SUV!
The next thing you need to do is monitor your credit score. As an American citizen, you’re entitled to a free credit check ever year. Knowing what your score is—and checking for opportunities to improve it before you make a vehicle purchase—will be helpful for your finance specialist when putting together your entire financial package.
The next step, after identifying your credit score (and ways to improve it), and what your affordability is, you’ll need to begin researching bad credit car loans, and which lenders are right for you.
Anyone with subprime credit is a good candidate for a bad credit car loan, which can sometimes be found at a traditional dealership, but more often than not is something that your local Buy Here Pay Here dealership can help you out with. According to recent studies, half of America has subprime credit, and there’s always a need for banks who are willing to lend to people with risky credit histories. Sometimes, a local bank will partner with a dealership to take on a questionable loan, but typically speaking, bad credit car loans are the purview of subprime automotive lenders.
If you know you’re one of the tens of millions of Americans who have subprime credit, or think you might, you may be surprised to find out that a Buy Here Pay Here dealer has the ability to lend to you when other’s won’t or can’t.
With some financial planning scoped out, your credit score researched, and your list of needs in a car (note: not desires) figured out, it’s time to start considering what sorts of vehicles you might qualify for. Historically, subprime auto lenders have not been known to offer great cars. After all, their theory is: if you have bad credit and lack stable income, chances are, you won’t ultimately be able to afford the car you just bought, so why bother selling you something nice? In theory, this makes sense. But businesses who do this treat the customer as though he or she is last—not first—and do themselves a disservice in the process by selling cars that aren’t worth the gasoline you put in them.
The better, smarter alternative is to work with a company that stands by their vehicles, and won’t sell you something that they themselves wouldn’t drive. When researching the types of car dealerships that work with subprime borrowers, pay special attention to vehicle quality, and any available warranties. In the short run, these cars might cost a little more than a “tote the note” dealership, but in the long run, they’ll be something you can rely on, and be proud to drive.
Having bad credit and trying to buy anything—let alone a major piece of machinery—is a big chore. But there are good companies out there who will not only work with you, but will root for you. All you have to do is be honest about your situation, and do your homework before you buy.