How to Buy a Car with Bad Credit

Do you have a bad credit rating and are looking to buy a car? If, so you’ve come to the right place. Even though it may feel hard to buy a car with a poor credit rating, it is still possible to buy your dream car. There are a few things that you need to know and consider first.

Shop for Cars has put together the complete guide that outlines how you can buy a car if you have a bad credit rating.

Let’s get into it.

Find Out Your Credit Score

The first and most important thing that you need to do when it comes to buying a car is finding out and understanding your current credit score. Use online websites to find your credit score, many of which are free and will help you understand where you stand.

The benefit of finding out your credit score is you can take the relevant steps to improve it before you begin searching for a car and applying for a car loan. The greatest thing about credit scores is they can be improved quickly.

Building and Repairing Your Credit Rating

If you have a poor credit rating, the first thing that you need to ask yourself is, how can I improve my credit rating fast? Thankfully there are fast and easy ways to improve your credit score to help you buy a car.

It may seem obvious but this point cannot be overlooked, the first thing that you need to do to improve your credit score is to minimise your debt and pay your bills on time. The less debt that you have, the less risky you will look to lenders. It’s as simple as that. Never miss a recurring payment, whether it be your home loan, rent, electricity payment or anything in-between because it will impact your overall credit rating.

Set a Realistic Budget

Once you know where you stand, the next thing you need to do is set a realistic car buying budget. The biggest mistake car buyers make is looking at vehicles that are out of their reach.

Think about what you can afford and how much you want to spend. Apart from the purchase price, you need to consider the ongoing expenses like petrol, upkeep, insurances and registration, all of which play a huge part of the car buying process.

The best way to help understand how much you can afford is to use free online budget calculators. You can input your current earnings and repayments and the system will give you a rough estimate of what you can afford without falling into loan stress.

Save a Deposit

To maximise your chances of buying your dream car it is always smart to save a deposit. Research has shown that the best way to receive approval from a lender when buying a car is to have a 20% deposit. That said, 20% deposit is not mandatory and most lenders will lend you 100% value of the car. However if your credit ranting is poor it makes it challenging and near impossible without the use of a decent deposit.

To be conservative, try to aim to save at least 10% of the value of the car that you are looking to buy. Having a small deposit will go a long way to securing your dream ride.

Consider Joint Loans

If you have a poor credit rating, one of the bet ways to get your hands on your dream vehicle is to consider a joint loan with your partner or family member.

The benefit of a joint loan is you will have two incomes available to pay down the debt instead of one. When you have more earning capacity you will be seen as less as a risk to lenders and more suitable to take out a loan to buy a car.

Shop Around

The worst thing that you can do when it comes to buying a car is going with the first option you see. The same can be said for car loan providers. Make sure that you shop around what’s available in the market. If one lender says no, another lender may say yes. Each lender has their own unique set of requirements for applicants. The more you shop around, the better your chances are for receiving a loan to buy a car.

Final Word,

If you have a poor credit rating, buying a car may feel difficult, but it doesn’t need to be. There are ways that you can get your hands on your dream car even with a unfavorable credit rating. The tips presented in this piece are a few proven ways that you can buy a car if you have bad credit rating.

We hope you enjoyed reading this article. To read more articles like this, please visit the Shop for Cars latest news page here.

About Shop for Cars,

Shop for Cars is Australia’s first car dealership-only online classified. Shop for Cars brings you the best quality new and used vehicles from trusted motor dealers Australia wide. Shop for Cars currently has over 12,500 cars listed for sale all from licensed Motor Vehicle Dealers ONLY.

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DISCLAIMER: This is all based on opinion and does not consist of legal or professional advice. Please research and consult with all relevant parties prior to making a buying decision.