The type of car you should get from bad credit depends on many different factors. However, there may be more vehicle options than you think if you know what to look for. We’ve got tips on how to get the most out of your bad credit finance experience!
What car can I get?
The type of car you can get with bad credit will depend on your individual circumstances and the lender you are working with. It is important to know that the process of having a bad auto loan loan is not the same as getting financing with a good loan. However, you can still have many of the same options when it comes to vehicles.
Even with a less than ideal loan, some borrowers may still be eligible to buy new cars. Many consumers struggling with credit problems often think they are stuck financing used scrap if they can’t afford one, but that’s not true.
Subprime Car Lenders they generally provide loans for a wide variety of cars, but they will not finance a vehicle that is too old or in too bad condition. The minimum loan amounts are normally $ 5,000 and the vehicles must be less than 10 years old and less than 100,000 miles.
With the quality of the vehicles you have a better chance of getting an affordable, reliable used car these days, perhaps even a certified used car. And inexpensive new vehicles are also not out of reach. It all comes down to what you can afford and what your needs are.
When looking for a different (or first) car, it’s important to match it up. Each driver’s needs are different and it is therefore important to do your research, build a budget, and know what you need before starting the purchasing process.
Know what you need
If you are like many buyers, you can start building your dream ride online – then you need to lower your expectations to match your budget or vehicle needs. Sure, you might want a turbo racing car, but when you’re driving with the kids it’s not practical. To really start considering what type of vehicle you should buy, it’s a good idea to make a list of must-have and things that exclude your option from running.
For example, if you drive into your office for an hour or two each day, or have to sit in huge blocks of high traffic, fuel economy can be one of the most important factors when purchasing a car. If you need to comfortably fit a family with plenty of space for equipment, you can shop by number of seats.
On the other hand, if you stick to tightly leather seats and heated steering wheels, purchasing a vehicle with poor credit can be a bit more of a challenge. It’s not that you shouldn’t have everything you want in your vehicle, but when you start out with a bad car loan, you may have to sacrifice luxury for practicality. Remember to focus on what you are need in the vehicle and not what you are want.
After you’ve made your essentials checklist, it’s time to dive into your research. Check both new and used auctions to find a vehicle that meets all the required fields, and even look at one that almost ticks everything off your list so you know what’s there. You can start by reading some expert opinions on a trusted website such as Kelley Blue Book, NADAguides, or CarsDirect. Also, don’t forget to browse consumer reviews and see what people think about the vehicles that interest you.
Think of buying a car like buying clothes: sometimes you have to try something on, and that’s when the test drive comes in. When you’re looking for the right fit for your vehicle, it’s important to do a test drive and make sure everything fits your needs, is comfortable for you, and is safe to drive. If you are looking at a used car, make sure it has been checked by a certified mechanic before signing any documents.
Know what you can do
Knowing what you want in a car is one thing, but getting the right vehicle at the right price is another completely. To know what you can get for your next car you need to build a budget for buying a car.
When you work with a subprime lender as a consumer with credit problems, you are typically expected to show an income of between $ 1,500 and $ 2,500 per month before taxes for one job. If you don’t reach this minimum threshold, it can be difficult to qualify for a car loan on your own.
Additionally, you must have sufficient income to comfortably pay for your car loan and car insurance. Lenders ensure that you meet these qualifications by calculating debt-to-income (DTI) and payment-to-income (PTI) ratios. You can do this yourself to make sure you don’t go overboard with the car loan.
Generally, you must have at least 50% to 55% of your pre-tax income after paying your existing bills to qualify for a subprime car loan. Lenders also require that your combined car loan and insurance payments are no more than 15% to 20% of your income, but the less the better.
Also, remember that interest rates are mainly based on your credit score, so a lower credit score usually means a higher rate. On average, consumers in our dealer network qualify for an interest rate of around 13%. The higher the interest rate, the more you pay for the loan. Due to the higher expected interest rate, it is important not to extend the loan term too long, the longer the loan, the more interest you pay.
However, you can fight off higher interest by making a large down payment. Chances are that you still need to make one as a bad credit borrower. Typically, subprime lenders require a down payment of around $ 1,000 or 10% of the selling price of the vehicle. As a general rule, the more you can save for a car loan, the more money you can save on interest, as the down payment reduces the amount you have to borrow.
Finally, don’t forget that the sticker price is only the first number when calculating the total cost of your car loan. You are expected to have full car insurance for the life of the financing, and you also need to factor in taxes, title and license fees as well as fuel and maintenance costs for the life of the vehicle.
Know what your loan is
To know where to start your car financing journey, you need to know what your credit is standing on so you can check common car loan amounts and interest rates for people in similar situations. Of course, your car loan is unique and depends on what you qualify for. But if you don’t know what the lender sees on their credit reports or what your creditworthiness is, you let them check all your chances.
By doing your homework, knowing the average interest rates for different credit levels, and where your credit score drops on that scale, you have the negotiating power to fight for better auto loan rates and conditions for your situation. It’s also important to know what you need to work on to improve your credit. A car loan is also a great credit building tool as your payment history is the biggest factor in your creditworthiness.
The Bad Credit Auto Loan process is different
When you get a bad car loan, consent must first be given. The loan amount you qualify for determines what vehicles you can get. When you apply for a car loan with a special financial dealer, they will pass your information on to their lenders.
If approved, the lender will call the financial manager to let them know what interest rates you qualify for and what your maximum monthly payment may be. Then you select a vehicle from the dealer’s inventory that meets your needs and meets credit requirements.
Finding the right dealer
Your ability to get the right car does not have to be limited by your credit situation. If you’re ready to take the next step towards car financing, then let it go Auto Credit Express be your guide. We have a network of special coast-to-coast financial dealers who are registered with subprime lenders who are willing to work with borrowers with bad credit. We can instantly find a dealer near you – just fill in quickly, free of charge and without obligation car loan application form get started now!