Unless you have plenty of money to spare, then you’ll need financing to get a new car. This can be very difficult if you don’t have an excellent credit history. However, you shouldn’t despair. There are plenty of things that you can do to change this.
First, you should understand what your credit report says. Financing institutions will use this information to determine whether or not to give you a loan. You can get a free credit report by going online.
Make sure that there are no mistakes on your credit report. You may be charged with accounts that aren’t truly yours or even had companies reporting that you made late payments when you really didn’t. These inaccuracies can easily cost you hundreds of dollars.
In order to build your credit to get a new car, you will need to get your finances in order. You can’t begin to fix your credit if you aren’t living in the black so to speak. Not only do you need to have enough money to cover your monthly expenses, but you’ll also need to have enough to set aside to pay off debts.
If you aren’t willing to wait to build your credit to get a new car, you can always find a Buy Here Pay Here dealer in your area. They specialize in working with people who have bad credit. They offer in-house financing, so you likely wouldn’t get turned down after a credit check.
However, this often isn’t the best option for people. For one, these dealers sell used vehicles for more than true market price. Also, you will usually have to pay the highest interest rate that the dealer can legally charge you for the loan.
If you do have bad credit, it’s possible for you to get a traditional loan. It will just be a bit harder. Lenders would be less interested in you because you’d present a higher risk. You can help reduce their perceived risk by offering a larger down-payment. If you can afford to put 25%-30% down on the car, you just may be able to get a loan with bad credit.
Another option would be to avoid getting a more expensive vehicle that you’re interested in. You could instead choose a less expensive vehicle that requires a smaller loan. You would only have to keep the vehicle for a year or two.
During this time, you could make your payments on time which would help raise your credit score. After a year or two, you could use the vehicle to trade in for a nicer model. Not only would you have the trade-in, but you would have a better credit history which would make it easier to get a traditional loan.
Another option for people with bad credit is to get a co-signer or co-buyer. This is someone that has a good credit history that they’re willing to put on the line to help you out. The worse your credit is, the better your co-signer or co-buyer’s credit has to be.
If you’re willing to wait until you have better credit, then there are plenty of things you can do to raise it. You can get a gas or retail card and use it instead of cash. This can help you increase your credit score slightly.
After it has risen slightly, you should look into getting a major credit card. By paying these bills on time, you will raise your credit score dramatically. It’s vital that you only get a card that actually reports to all three bureaus though.
If you can’t get a traditional credit card, then you should look into a secured card. You will have to pay money upfront though. But if you make your money payments on time, you can get an unsecured card much easier.
You should know that it can take a long time for you to raise your credit score. It all depends on just how bad your score is. If you have a bankruptcy up there, it will take much longer as opposed to having a few late payments on your credit history. If you’re patient and follow some of the above-mentioned tips, then you will see results sooner or later however. You’ll be able to get that new Ford Expedition or Chevrolet Malibu in no time.