If you’re short on credit and need a car, your options can be pretty limited.
While buying a car for cash is a simple solution, most car buyers don’t have quite that much coin laying around. With the average cost of a used car now hovering at around $20,000, getting a new set of wheels without a loan is just about impossible for most of us.
If your credit isn’t so hot and you need a car, keep reading for a closer look at getting auto loan approval with bad credit.
Work on Your Credit
While it probably won’t get you into a new car tomorrow, one of the smartest things you can do to prepare for getting an auto loan is to start working on your credit now.
Don’t wait until you need to borrow to start worrying about the state of your credit. Start paying down other accounts now and catch up or avoid late payments.
It takes time to improve your credit, but the work is definitely worth it.
Do Your Research
One of the most valuable things you can do when shopping for a car is to do plenty of research before ever setting foot on a dealer’s lot.
Know what you’re looking for and what the specific models you like are worth. If you know what you’re looking for, it will be much easier to stay within your budget and borrow the money you need.
Go Back to Basics
If you’re trying to improve your credit, one of the best things you can do is just make payments on time.
To make this easier, trying buying a more basic car. Stick to something reliable, simple, and functional. Once you’ve paid it off — and improved your credit — you can move on to something you really want.
Make a Bigger Down Payment
If you have the cash, putting a little more money down on a car can really expand your lending options. A bigger down payment can often open up more lending options and even lower interest rates.
Try waiting a little while longer and getting as much cash together as you can before looking.
The Simplest Path to Auto Loan Approval: Get Pre-Approved (Before Visiting a Dealer)
To really make sure you get approved and are truly ready to buy a car, try getting pre-approved for a loan before you go shopping.
While many car dealers offer financing, they only have access to a handful of lenders. Do your own research and the options are endless. It’s not hard to find bad credit auto loans and alternative financing options if you’re willing to look.
Getting an auto loan approval doesn't have to be complicated. Even if you don't have great credit, there's still hope.
Take some time to work on your credit, save for a bigger down payment, and be sure to explore all of your lending options.
Check out the rest of our articles for more on daily living and money management.