Despite the extra challenge presented by having poor credit, there are still ways to find financing and purchase a vehicle.
First off, get a printout from all three major credit agencies: Equifax, Transunion, and Experian. You will find that scores may differ between the three agencies. Also, you need to know the exact number value of your credit score. Even a difference of a few points can make a difference. The worse your credit, the higher your interest rates will be. Review your credit report for mistakes. Any corrections that you can make may improve your score. If you find small bills that have gone to collection, pay those off. Your rating not only depends upon the amount of credit you owe, but the amount of open accounts in collection.
Take some time out from using your existing credit. For about six months, make sure that no one ruins your credit. Inquiries bring down your score, and even small purchases like a new cell phone can cause a credit check to be run. Do your best to control your spending and pay for what you can in cash—this will have a positive effect on your credit, given some time.
Accept the reality of the loans that you may qualify for. There are many sub-prime loans available, but be prepared to pay a higher interest rate. Consider buying a late model, used car instead of a brand new vehicle. Budget your current expenses, so that you can gauge how much you can spend per month.
Save for your down payment. Most lenders will require some down payment for buyers with poor credit, and the larger the amount that you are willing to present, the better. Paying ten percent of the total cost of the car as a down payment is a good amount to aim for.
Research credit unions and small lenders. These companies usually have more flexible standards for loans, particularly for customers. If you don't currently have an account with a credit union, it may be worth your while to open an account with one. Remember that your planning now will make your car purchase a smoother process. Protect your credit as much as you can, so that you'll get the best financing possible. Once you do get your car, keeping your payments current will improve your credit.
Informational Credit to Sullivan Auto Group