Your car is no longer a luxury. It’s a necessity, especially when you think of commuting to your work on time. But if you have bad credit, getting a car can become quite challenging because banks are not willing to extend you a car or any other kind of loan.
In This Post:
How To Save Money On Buying A Car When You Have Bad Credit
Here’s how you can save money for your car when you have bad credit:
Calculate Your Budget
Never go shopping for a car without a budget, even if you have all the money in the world. Review your financial position.
Now it’s time to figure out a way to afford your new car. You have two options: you can get a loan, or you can get a secondhand car at almost half the price of the new car. Also, understand that when you pay a bigger down payment, you will get your car at a lower interest rate. This means you might want to consider saving up a little more before you apply for a loan. Cut down on your expenses while you save money for your car.
Bad Credit Auto Loans
If you have explored all mainstream avenues of getting a car loan, there’s still some you probably haven’t check out. Some lenders are willing to approve your auto loan even with your bad credit. In some cases, you don’t even have to put a down payment on your loan also. Usually, they charge a higher interest rate, or their payment term plan is shorter.
When choosing a bad credit auto loan provider, we suggest reviewing the provider carefully. Crediful has a list of Bad Credit Auto Loan Providers for 2019.
Check Nonprofit Car Ownership Programs
Some states in the US have car ownership programs for low-income households. Unfortunately, not all states have a car ownership program, so you need to check if your state has one. Find out if you qualify for the program. With this program, you can get your car loan approved and at a very fair rate.
Improve Your Credit Score
This could take a few months, but even if you aren’t planning on getting your car through a loan, we recommend you should work on improving your credit score. Your credit score plays an important role in your future financial position. Improving it would only help you.
Some ways you can improve your credit score are:
- Pay your bills on time. Have you been missing payments on your loans? Set up automatic reminders or pay these bills as soon as you get them. Delaying payments might result in getting your bills to collections. This puts a serious dent in your credit score.
- Don’t remove paid debts from your loan history. If you have successfully paid off a loan, it reflects well on your credit score. It shows that you are capable of paying off your loans. Why would you want this information removed from your credit history?
- Review your credit score. You’d be surprised to know that chances of miscalculating your credit score are quite high. Before applying for any kind of loan, make sure you review your credit score on your own. Check for any inconsistency. If you feel a mistake has been made, get it removed immediately.
- Pay off existing debts. You might want to delay getting a car loan for a few months while you pay off your existing ones. Talk to a financial advisor about consolidating loans and negotiating with loan terms and payments to improve your credit score.
Consider a Secondhand Car
Secondhand cars are often a very good investment. You don’t have to get a very old car. Even a car two or three years old can be as good as a new one. And the price would be around 30-50% of a new one. Plus when you get a secondhand car, you avoid paying all the extra fees like shipping fees, dealer preparation, insurance, etc. The insurance renewal cost and the annual registration fees also go down. This means more savings for you.
When buying a secondhand car, check that all documents are complete. Get a mechanic to check out the car. Ask him to give you an estimate on the car.
Skip the Add-ons
There’s an upgraded version in every car. While these upgrades look very cool, often we don’t even need them. Check the add-ons you are getting in your car. Do you really need them? If not, why not remove them and get a renegotiated price for your car. Also, you can always add them later when you have the money.
Buying a car is probably one of the biggest investments you make, so think carefully before you chose any of the above options.