With millions of Americans swamped with debt and bad credit, many people don’t even consider getting a car loan. They worry about whether or not they can get financing to buy a car and pay for it over time.
While the process might be more difficult than if you had good credit, there are plenty of options available for financing, even if you have less than perfect credit.
What is Bad Credit?
Bad credit is a catch-all for so many types of credit scores, with varying degrees of severity. People who apply for loans with really bad credit are likely to be denied than approved, but there still are options available that will allow people to own their vehicle and get back on track financially. It is difficult to get a car loan if you have a low credit score or a poor payment history, but it can happen.
A better way to think about your application would be that instead of “bad” credit, why not describe your situation as “no” or limited experience with credit? Car dealerships realize this isn’t the first time you’ve seen your credit report or that you might be nervous about the process.
What is a Good Credit Score?
A “good” credit score depends on who you’re talking to, but it’s typically above 700. The three main credit reporting bureaus use slightly different formulas to calculate statistics like payment history, debt levels, and available credit.
By law, they must provide some free information on their websites if you request it, but this doesn’t allow access to your full credit report (which could contain more detailed personal information). If you want to find out what your current score is, online services will evaluate your report for a small fee.
Does it Matter if my Credit Score is Bad?
Even the most affluent citizens can end up with bad credit, but that doesn’t mean you should give up entirely on trying to finance a car purchase. The goal of your inquiry should be to get financed through an independent financial institution, not the car dealership specifically. This means you want to skip speaking directly with individual salespeople at dealerships and instead speak directly to loan officers or financial advisors (who represent lenders rather than specific dealerships).
They might have good relationships with certain auto manufacturers as well as banks they do business with. In this scenario, if approved for financing from them, they could quickly work out a loan agreement with your chosen manufacturer without requiring the lease payment from your employer.
The first thing every peer-to-peer lender will ask for is a copy of your credit report, something you should already have on hand. This ensures the lender has all the information they need to make an objective decision about your financial situation and how likely it is that you could repay a loan promptly.
Can you finance a car with bad credit?
People with bad credit may have difficulty finding financing for a car, but it is possible. There are a variety of options available to those who don’t have excellent or perfect credit. If other lenders have denied you in the past, consider an online lender for better ways to finance your vehicle.
How to own a car with bad credit
Just because your credit score isn’t perfect doesn’t mean that it won’t be possible for you to buy the car of your dreams. However, there are some things to keep in mind when trying to finance a car with bad credit.
Bad credit is the term used for various credit scores that aren’t considered “good.” Unlike excellent or even good scores, people who have bad scores may have trouble finding financial institutions willing to grant them loans. If you don’t know what your score might be, try one of several methods for finding out online. It’s always free and typically lasts only about five minutes.
It’s never been easier to get approved with many online lenders and dealerships offering bad credit auto loans. Some buy here pay here car dealers will approve no credit or poor credit by looking at other factors such as income and insurance. Others will require proof of income, such as a recent paycheck stub or two, while some will also ask for proof of your residence.
Simply put, even if your credit score is not that great, it will be possible for you to finance a car. You’ll need to shop around and find a lender who is willing to take a chance on you. Some dealerships might consider giving you a loan if other dealerships won’t approve your application.