Our credit histories speak volumes of our spending habits. There’s no getting around that. We all need a point of reference by which to gauge the people we interact with. In the financial sector, an individual’s credit history makes for a point of reference into how a person is capable of using his or her finances responsibly.
But what if, let’s say, one was simply a victim of old bad habits? What if one was merely drawn to make poor financial decisions during the early part of one’s life? What if one has now finally learned how to handle money properly? Does it not follow then that a bad credit history is not necessarily an accurate depiction of an individual’s financial acumen?
All that doesn’t matter to lenders, unfortunately. Records will always speak for themselves, after all.
But, that’s not the end-all-be-all of things. Fortunately, there are many ways to buy a car even with bad credit. It’s not impossible. It is, however, significantly more difficult. So, how does one go about it? Read on:
Try To Mitigate Your Bad Credit History
This requires that you survey the battlefield months before you even begin any engagement. Start by cleaning up your credit record by paying off dues, adding positive information to your records, and by disputing credit reports when able. You may not be in the ideal situation, but at best, you’ve gained much better ground than before.
Contain the Problem
Whatever your bad spending habits are, cease them. You’re already in a deep hole, don’t dig any deeper. Be on your best behavior. Don’t take on new obligations. Stick to what you currently have and try to improve on those. At least show the lenders that you’ve had a change in spending behavior.
Pay With a Bigger Down Payment
Never forget that you’re already at a disadvantage because of your bad credit history. This means that the value of the car loan you’re going to get is going to be limited. Try to mitigate this disadvantage by paying with a bigger down payment. This is going to help offset fees, taxes, interest rates, and other hidden costs of buying a car.
Do Your Research
You have to be aware of market conditions. That includes the current market value of the car that you intend to purchase. This keeps you from being manipulated into a bad deal. Your loan rate will not only affect your monthly liability but also the total price of the car you intend to purchase. Those with bad credit will typically only qualify for high interest rates. Knowing to what extent your rates should fall is imperative.
Last Resort: Buy Here Pay Here
If, despite your best efforts, you’re still unable to secure a car loan from your bank, your best bet is to opt for an in-dealership purchase like Philadelphia buy here pay here. It’s basically a one-stop shop because the car dealer also acts as the financing entity. Approval here is almost always guaranteed. Be prepared to receive a double-digit interest rate though. But, if that’s better to you than having to walk, then you should be fine.