How to qualify for used car financing with bad credit
As written for The Safe Driver.
If you have bad credit, you might be worried about how to buy a used car. But it’s not impossible. There are many ways to get approved for used car financing with bad credit. Here are a few of them.
Save up a Larger Down Payment
You have a few options when it comes to making your down payment. If you don’t have cash, you can use some of your savings as a deposit. But another option is to ask the dealership if they will accept a trade-in vehicle as your down payment.
If you don’t want to trade in an existing car or truck, it’s best to save up more money than usual and put that towards the purchase price of your new car or truck. That way, when you go into financing negotiations with lenders and dealerships, they’ll see that you know what you’re doing. That makes them more likely to approve financing for an auto loan with bad credit.
Look for an Inexpensive Car
If you want to get approved for a used car loan, ensure the vehicle is in good shape and won’t cost too much to maintain. You should look for used cars Calgary under $5000 with low mileage. A newer car with less than 100,000 miles on it will last longer than an older model with more than 200,000 miles on the odometer.
The cheaper the car, the easier it will be to afford monthly payments without breaking your budget. The lower initial price means fewer years of payments in your future, thus less interest paid overall over time.
Get a Cosigner With Good Credit
If you can’t get your own car loan, consider getting a cosigner with good credit. A cosigner is someone who has a high enough credit score to help you qualify for financing. If you can find someone willing to co-sign on your loan application, they’ll be responsible for making payments if you default on the car loan.
If you have no luck finding a good cosigner or other means of financing, consider buying a used vehicle with cash instead of applying for financing through a bank or credit union.
Shop Around
Once you’ve determined the type of vehicle and financing you want, start shopping around. Even if your credit score is low, other factors may help you qualify for less expensive financing. Ask about any additional incentives available to you (such as military or veteran status) and if the dealer or their lender offers discounts or special rates.
Also, ask questions about fees and other charges associated with any car loan agreement, including origination fees, late payment penalties, prepayment penalties, and more. Remember to enquire about insurance coverage options as well. Many used car dealers Calgary Alberta will provide liability coverage for an additional fee during the term of your loan.
Persistence and patience are key to qualifying for used car financing with bad credit. There are many ways to get financed, but it will take time. Keep working until you find someone who will work with you.