Bad Credit, New Vehicle: Alternative Ways to Buy a Car
There are many different circumstances that can lead you to get a bad credit rating, and that can lead you to believe that you probably won’t be able to get a car as a result of this issue, but it doesn’t mean that you don’t have options.
If you have your eye on a model like the Chrysler 200 for example, here is a look at some of your options if you have bad credit but want to get a new set of wheels.
Before you head to the dealership
If you suspect that your credit record is looking a bit battered and that your score is not going to be all that good, but don’t know for sure where you stand, get a copy of your latest credit report before you start making any applications or head down to the car dealership.
It is important to be able to see what lenders are looking at and what your credit score is, as it will confirm your options and give you some guidance on where to go to get the loan that you want.
If you have a bad credit rating it is unlikely that you will be accepted on normal lending terms by a mainstream bank or a car dealership, who often act as a broker for a number of car finance lenders.
Consider a credit union
One of your first options, in terms of loan acceptance and interest rate charges, is to consider joining a credit union.
Credit unions are rapidly becoming an integral part of the auto loan market so you will be amongst many people in a similar position if you approach a credit union for a loan of this type.
The other positive aspect of taking this route is that the interest rates charged by most credit unions tend to be lower than average, for anyone seeking an auto loan with a bad credit history.
Getting your cash from other people
This doesn’t mean asking people you know to lend you the money, although that is always a possible option if you have some generous and trusting friends or relatives, but thanks to the growth of peer-to-peer lending, you might be able to get a loan from someone who lends money through one of these sites.
These lending sites will check your credit status and grade the risk accordingly, so they will attempt to match your request for a loan with a group of people who are prepared to offer to fund part of the loan, in return for an interest rate that reflects the risk attached to it.
Your success in getting approved will definitely depend on the extent of how bad your credit rating is, but it is an option.
The best advice to remember is to shop around and see what options are available to you, before you accept the first offer of finance, which could be more expensive in terms of interest charges, than you need to agree to.
Having bad credit is a potential hurdle to getting auto finance, but there is often a way around it.
Lydia Myers has worked in personal finance for years and is often surprised at how often people reach for a credit card or loan instead of considering other options for large purchases. She wants to open up possibilities in her articles so that people can choose what is right for them, without breaking the bank.