Purchasing a Car with Bad Credit

A bad credit score can make purchasing a car feel like a nightmare. But do not give up hope because there are a few routes you can explore to easily purchase a vehicle. If you are currently shopping for a car and you have bad credit please read on....

If you choose to save money first before purchasing a car you may be able to find a cheap reliable car locally from a private seller.
If you choose to save money first before purchasing a car you may be able to find a cheap reliable car locally from a private seller. | Source

Saving Money for a Car Purchase

If you have a rough idea of how much you are going to spend on a car purchase you can choose to save up over a period of time. This is a great option if you are not in desperate need for a car and you have time to wait. It is easier to put aside a set amount of money each week rather than trying to scape up all of your change at a moments notice. Remember to make sure that the amount you are putting aside fits in with your budget.

By having a cosigner you can purchase a new vehicle or a vehicle with a higher price tag while still receiving a lower interest rate.
By having a cosigner you can purchase a new vehicle or a vehicle with a higher price tag while still receiving a lower interest rate. | Source

Cosigners for Auto Loans

Another way to purchase a car with bad credit is to have a family member or friend cosign a loan for you. This means that the person cosigning is taking responsibility for the loan if you fail to pay it. If you have someone that will be willing to cosign your auto loan make sure you pay the loan back completely. Also make sure to have the payments in on time each month. By paying payments late you are not only hurting your credit more you are also hurting your cosigner credit as well.

Before you sign any of the loan paperwork double check that you can afford the monthly payment amounts. You do not want to realize that the payments do not fit your budget after the paper work is done.

Buy Here, Pay Here Dealerships usually sell a variety of used vehicles.  The prices are often higher and you will have a higher interest rate placed on your loan.
Buy Here, Pay Here Dealerships usually sell a variety of used vehicles. The prices are often higher and you will have a higher interest rate placed on your loan. | Source

Buy Here, Pay Here Dealerships

If you have bad credit and need a car immediately you can choose to purchase a vehicle from a Buy Here, Pay Here Dealership. These type of dealerships provide in-house loans based on your monthly income. You will pay a higher interest rate compared to a standard car loan with good credit. Also it is harder to negotiate the prices of cars at Buy Here, Pay Here Dealerships because they know that they are you last resort for purchasing a vehicle. These in-house loans are reported to the credit bureaus so make sure to make you payments on time. This will help to raise your credit score for future purchases.

Pros and Cons

 
Pros
Cons
Saving Money to Purchase a Car
You do not need a loan
It can take several weeks to save enough money. You will have to wait longer to purchase a car.
Using a Cosigner for a Car Purchase
You can purchase a car right away. You can recieve a lower interest rate. You may have the option of buying a new or a used vehicle.
You are putting someone else's credit at risk if you are unable to pay back the loan.
Buy Here, Pay Here Dealerships
You can purchase a car right away on your own. You can improve your credit score by making payments on time.
You can usually only purchase used vehicles with higher mileage. Your interest rate will be noticably higher.

How did you purchase your last vehicle?

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Comments 12 comments

CassyLu1981 profile image

CassyLu1981 4 years ago from Spring Lake, NC

I have done this actually. We really needed the bigger vehicle after we had our third kid so even though we had super bad credit we were able to go through wells fargo because my husband is military. Our payments are over $700 a month but it will be paid off come the first of the year!!! Voted this hub up and shared!


Denise Handlon profile image

Denise Handlon 4 years ago from North Carolina

Boy, this has a lot of information. It's always useful to know there is a way when credit has been compromised for whatever the life circumstances may be. Thanks for sharing this and I commend you on how quickly you got this out. Rated up/I/U


JillKostow profile image

JillKostow 4 years ago from Pennsylvania Author

CassyLu1981 - We also had to purchase a larger vehicle when my last son was born. We need a van for the four kids and us to fit in! We actually sold my smaller car for enough money to pay off the loan and purchase a used van. Even though the van was an older model than my car it needed to be done! Thanks for commenting and sharing!!


JillKostow profile image

JillKostow 4 years ago from Pennsylvania Author

Denise Handlon - Thanks for commenting! Many people do not realize that they can purchase a car with bad credit. It does stink that sometimes you have to pay slightly more than someone with better credit, but atleast you have a few options to look at.


one2get2no profile image

one2get2no 4 years ago from Olney

Very useful hub...thank you for sharing.


leahlefler profile image

leahlefler 4 years ago from Western New York

I had never heard of the buy here/pay here dealerships. Those are probably a good idea for people who cannot get a standard auto loan, but want to avoid having a cosigner.

If we have another child, we'll have to get a mini-van, too. We'd go for an older model to save money - cars lose so much value the instant you drive them off the lot!


Lipnancy profile image

Lipnancy 4 years ago from Hamburg, New York

Very useful hub. Many of my friends have to get car loans from the dealers. Some are reputable and some are a little shady.


JillKostow profile image

JillKostow 4 years ago from Pennsylvania Author

one2get2no - Thanks for commenting!


JillKostow profile image

JillKostow 4 years ago from Pennsylvania Author

leahlefler -We have quite a few Buy Here, Pay Here Dealerships in my area. Some of them are reasonable with their prices and loan terms and others, well not so much. We traded my 2002 Suzuki Aero in for a 1998 Ford Winstar when we had our 4th child. A ended up hitting a deer and my van was totaled after 2 years of having it. Luckily our insurance paid us enough money to purchase the new van which is a 2000 Dodge Grand Caravan. We only had to pay about $400 out of pocket so it worked out well. Most of the time a used car is just as good as a new one because all cars are bound to have problems!


mjkearn profile image

mjkearn 4 years ago

Hi Jill

good hub and great info here especially in today's commercial environment. Everyone is having money issues and falling into bad credit is nearly unavoidable today as I've found out.

Good job and congrats on the AP. Voted up and ticked.

MJ.


JillKostow profile image

JillKostow 4 years ago from Pennsylvania Author

mjkearn - Thanks for commenting! It is a shame that the ecomony is the way it is right now, but aleast they are options available for those who need it! Congrats to you as well on the AP.


lindacee profile image

lindacee 4 years ago from Southern Arizona

Great information for people in this challenging economy. This Hub is valuable resource for anyone with a less-than-stellar credit score. Thanks for the suggestions!

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