Finance

Sep 21 2016

5 Tips for Buying a Car with Bad Credit

#buying a car with bad credit
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5 Tips for Buying a Car with Bad Credit

Buying a car when your credit is bad can be an exercise in frustration and stress management. Approvals are tougher to come by and interest rates — what a lender charges you to borrow the money — can run into double digits. It’s not pretty.

Lending is based on risk. The more risky a borrower seems to be, the less money he can borrow and the higher his interest rate will be. Lenders view people with missed payments, a repossession or a bankruptcy in their recent past as “high-risk.”

But things may not be as bad as you think. Many people believe their credit is worse than it actually is. Moreover, there is almost always a lender willing to take a chance on even a high-risk borrower.

Here are five suggestions for navigating the buying process when you have bad credit:

If you are shopping for a car with bad credit, it’s probably a case of need rather than want. All you really need is transportation, so don’t set your sights too high. Think of it as replacing a broken refrigerator. When push comes to shove, what you need is to keep cold stuff cold and frozen stuff frozen. Do you need an automatic ice maker, wine cooler or cold-water dispenser? Forget the frills; choose a basic car to get you where you need to go. Make your payments on time, and you’ll be able to buy what you really want the next time around.





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