Purchasing a used vehicle with bad credit is possible.
Financing a vehicle with bad credit can be frustrating, especially if you have already been turned down by potential lenders in the past. It is possible to obtain an auto loan when you have bad credit if you go into the car purchasing process prepared. Potential lenders may offer you higher interest rates, or have more requirements of you if you have bad credit before they will lend to you. However, it is possible to finance a used vehicle if you have bad credit.
Instructions
1. Review a copy of your credit report. This can be done by going to annualcreditreport.com and requesting a copy of it. There are three credit reporting agencies, TransUnion, Experian and Equifax. Each may have slightly different information, but getting a copy of your credit report will allow you to check if there are any errors on your report that may be bringing your score down.
2. Save up a larger down payment. The more money you have for a down payment, the more appealing you will look to potential lenders. This will show them that you are prepared to purchase a vehicle, and were able to save the money. You will want to have at least 20 percent of the purchase price, or even as much as 50 percent.
3. Find a reliable co-signer for your loan. Some potential auto lenders may require that you have a co-signer, since your credit makes you a potential risk. A co-signer will give you a better chance at approval on a loan for a used vehicle.
4. Prepare yourself for a higher interest rate. Most lenders charge at least 2 percent more interest on used vehicles alone, and given that your credit rating is less than perfect, you can expect to even have a higher rate. Getting preapproved for an auto loan will avoid any surprises when you are vehicle shopping.
5. Know the history of the used vehicle you want to buy. Since you will be paying more for the loan because of your poor credit, have someone check it out before you sign any papers. Anything can go wrong at anytime, but knowing the car is in good shape should avoid any costly repairs right away.
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