If you’re working on repairing your credit, it can feel like you’re never going to get a car loan. But you shouldn’t despair; with a little homework, and a few tools, you can get a car loan no matter what your credit.
Look At Your Score
Before you so much as contact a lender, you should first see what they’re going to look at. Under the law, you’re allowed to request a copy of your credit report, for free, from each of the three major credit bureaus. You should request them and look at a few things, starting with your overall score. Read through the report closely; are there any errors you can correct? Are there any bills you can pay and get off your report? A few minutes spent cleaning up the report will be a big deal in the long run.
Know Your Budget
Next, break out your budget; how much can you afford to pay for, when it comes to a car? A great starting place is your current car payment, if you already have one. If not, simply work out what you need to spend on food, rent, utilities, and other expenses, and then set aside a portion of the rest as your “car payment.” It’s a good idea to do this a few months before you shop so you can see if your payment expectation is realistic. Either way, know what you can afford and leave room in your budget for emergencies so you won’t have to worry about the bills.
Even just a few years ago, for many people, their car loan options started and ended at the local bank and the dealership. But thanks to the Internet and a growing need for car loans, there are a suite of lenders available to everyone, even those of us with bad credit. Like any company you work with, it pays to do your homework; look for reviews and other discussions of each lender online, and talk with friends and family about lenders they’ve used. This will give you a sense of how they work, and whether you want to do business with them.
Ask For An Itemized Bill
Any respectable dealership will break down exactly how much you’re paying and just as importantly what you’re paying for. Some fees are simply unavoidable; for example, you’ll likely be paying some form of tax on your new car purchase. Others, however, are worth asking about, and some, like “rustproofing” or other types of costs, can simply be excised altogether. If the dealer refuses to remove these fees, take your business elsewhere.
Know What You’re Signing
Unfortunately, it’s not unheard of for consumers to be treated as second-class citizens based on three digits on a report. A good example is the “conditional sale agreement,” which essentially means that the dealership, for all intents and purposes, owns the car until you loan is paid off. This isn’t uncommon in buying, say, a tractor, but when you’re buying a car, especially if you’re paying up front, the car should be yours when you drive it off the lot.
In short, be a smart consumer, and no matter what your credit, you’ll have a new car to enjoy.