How to buy a car with bad credit part 2

This is part 2 of a many part resource on buying a used car with bad credit. Make sure that you have already read part 1 of How to buy  a car with bad credit

The first step that you should take is to find out what your current credit score is. And you need that piece of information before you go to the car show room and face the dealer. If you are reading this article, then you probably have a bad score – but exactly HOW bad is it?

You can find out your credit score through Equifax, Experiean, or TransUnion. Just be aware though that all these three credit agencies have a different way of grading your credit scores, and, depending on the financier (that is, the lender) they may prefer to look at all three of them, or just one of them. So, you need to make the effort of getting the details from all of them.

This might not be what you want to do. I know, I’ve been there. There is nothing worse than the day the bank statement flops onto the mat. Are you the kind of person who picks it up, opens it and reads it even though you know that it is going to be bad news, or are you one of those people who throws it on the to-do pile, with all the other pieces of mail that you must look at? It’s not surprising really, there isn’t just the problem that your finances are bad, there is something of a sense that you are out of control and there is some sort of shame in that. But seriously, you shouldn’t.

They are just numbers on a piece of paper, and you are just another statistic as far as the banks are concerned. They can’t hurt you, as long as you are prepared to do something about it, so don’t keep putting it off. Reach down deep and do something about it – look realistically at your financial situation.

So getting that credit report shouldn’t have you running for the hills and thinking that it is just another financial burden; just knowing what your report is will save you thousands of dollars in the long term. Imagine if you turn up at the car dealership and, after you have spotted your dream car, the dealer goes to his computer and comes back looking sorrowful. “Sorry pal, you have a very bad credit score, and the interest rate that they are offering you is very high.”

If he is a good dealer, he will turn round and help you work out your situation, and if there isn’t a cheaper car. But he might not be. He might be more than happy to suggest that he is sure you can afford it.

Again, don’t go in with your eyes closed. Work out exactly what you can afford, and stick to it.

The recommended figure is that you shouldn’t be paying more money per month than 10% of your income. But if you have a poor credit rating now, the chances are that you already have too many out goings, so your car shouldn’t be more than 5% or even 1% of your income. And if that doesn’t sit well, then you need to think again. Don’t play bad in a bad situation.

For the general score rating, any score above 700 is very good. Those folks who have a score which falls between 600-700 are in the okay or safe zone, and those falling between the 500-600 range are in a bad zone where they risk being charged at a much higher rate of interest. For this last range, they should opt for subprime lending.

And of course, interest rates vary hugely from state to state.


Disclaimer: this hub is for information/entertainment purposes only, and is not intended as professional advice.

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