Buying a Used Vehicle with Poor Credit: The Basics
Buying a Used Vehicle with Poor Credit: The Basics
Posted on January 25, 2024
There are many reasons why you might find yourself dealing with a poor credit rating. Illness, the loss of a job or other unexpected events may cause a serious drop in your credit score, which can make it difficult to get financing for a used car. However, there are ways you can secure bad credit car loans, and we'd like to give you a few tips for getting started and what to expect.
Understanding Poor Credit Car Financing
Before you seek out non-traditional car loans due to your poor credit, it's wise to understand how these loans differ from one you might receive from a bank or large financing company. Bad credit car loans are usually offered by used car dealerships and have a variety of interest rates. These rates might be higher than ones offered to those with better credit, but you can always compare what different dealerships offer you before you decide.
What to Expect at the Dealership
When you visit a dealership that offers bad credit car loans, you can expect loan officers to work closely with you to understand exactly what you can afford. They may pull your credit report, but not all lenders judge your ability to pay simply by that number. If you have steady employment and are working to repair your credit, that may be enough to secure a loan.
Loan Terms
If you have poor credit, you may be offered a long-term loan that can help lower the cost of monthly payments. The length of the loan may vary with dealerships, but some can extend up to five years. If you accept one of these loans, make sure you tell the loan officer exactly what you can afford in terms of payments and whether you will have the option to refinance in the future, if your credit permits.
Having poor credit can make it difficult to secure a used car loan. However, when you understand the basics of bad credit car loans and how they can benefit you, the road to financial growth may be easier to navigate.