When you need a car but don't have a credit score high enough to buy one with traditional financing, you may have to consider other options. There are some things that you can do to get that car and help to repair your credit rating at the same time. It is not always easy, but if you are willing to put the effort in, you might be surprised what you find available to you.
Shopping For Options
When you start your search for that perfect car and the right place to buy it, you may have to look at a few different options. There are dealers that will work with you to get a loan from a bank, a high risk loan from a third party lender, or a few that will let you pay the dealer directly every week or month. You should talk with the dealer you choose to see which options they offer and what is the best fit for you and for them.
Poor Credit Financing
Some dealers will offer you a car loan that is structured very much like a traditional loan. The difference is that these loans are offered by finace companies that work with high-risk clients. In other words, even if you have poor credit, they are willing to take a chance and offer you financing. In some cases they may require a large down payment that shows them you are serious about making payments and will do what it takes to pay the money back. The down payment may be 20 percent of the loan and the term of the loan shorter, but if you can make it work, it might be the best option for you.
High Interest Loans
You can get a loan with a lower down payment and a longer term from some lenders, but they may have a much higher interest rate. In some cases, the rate can be as high as 21 percent or more. Over the term of the loan, you are paying a lot of interest, but if this is the only option you have, you may still want to consider it. If you go this route, be sure that the lender is reporting your payments to the credit agencies so that you are building good credit as you make your payments.
Buy Here, Pay Here
There are dealers that will offer one other option as well. In-house financing or "buy here, pay here" can be a good option if that is the last resort. In most cases, this is the dealer taking the chance and holding the title in-house and allowing you to pay weekly for a car while you drive it. If you miss a payment, they will require you to turn the vehicle in or they may come and get it, so be sure to stay in contact with them at all times. There is little to no grace period on these loans because they stand to lose too much if you default on the payments.
Get in touch with a business like AutoStart if you have bad credit but need a car.