Do you need to buy a car but have bad credit? Many people assume they will not be able to buy a car with bad credit but that is simply not true. While subprime loans got a bad name because of the housing collapse a few years ago, people whose credit is not great can get subprime auto leads that will actually help them rebuild their credit rating and score.
1. Take a look at your credit.
Before you go anywhere to look for a loan to buy a new or used car, you need to get real about your credit situation. You can have your credit report pulled so that you can see what lenders see when they look you up. This may not be a fun process but it is an important step to getting your loan.
While looking at your credit report can be painful, you should know that you are not alone. It has been estimated by Experian Automotive that as many as 28% of buyers of new cars and 54% of people who buy used cars have credit scores that 660. A credit score of 660 or higher are viewed as having good credit. If you have a score below that, you should be able to get a loan for a car purchase but you will pay more in your interest rate.
There are several rankings for people whose credit score is lower than 660. They are:
- Deep subprime refers to people whose scores are 500 nor lower.
- Subprime is for people with scored from 501 to 600.
- Nonprime people have scored between 601 and 660.
Deep subprime and subprime borrowers accounted for about 10% of all new car sales in 2014 and nearly 32% of people who bought used cars during the same time period. The bottom line is that you should not be embarrassed (some people are) because many more people are a similar situation to yours.
2. Go over your finances to see how much of a car you can afford to buy.
Beyond getting a loan, you need to know what kind of car payment you can afford. Before you start looking for bad credit auto leads, you need to look at how much money you have coming on and what your expenses are. Remember that the price tag on the car is not the only thing you have to pay when you get a car. You have to register the car, you have to buy insurance for it and you have to pay to maintain it. You should take all of these expenses into account before you start your car shopping for used car leads.
3. Save for your downpayment.
As soon as you can, you should start putting some money away for your down payment for your car. When you are looking for special finance auto leads, you should know that when you are going to go for a subprime or deep subprime loan, you will do yourself a big favor by putting down as much as you can towards the car you want to buy. The requirements from the lender will be at least 10% or $1,000, whichever is a larger amount. If you are trading in a car or truck that can be sued as a downpayment.
4. Get your paperwork together.
Before you head out you need to bring:
- Pay stubs.
- Tax forms. If you get W2 forms, bring those in. If you have a 1099 form, you should bring that.
- Bank statements This is very important if your pay is not as easy to document.
- A utility bill or lease. If you do not have either of those, you should bring something that shows proof of your residence.
- You may have bring information for your personal references. Make sure you talk to the people you will use as references before you give their information to anyone.
There is always a chance that you will not need all of these documents when you get to the car dealership but it is always good to have something and not need it than need it and not have it.
The bottom line that you can get a car loan even if with bad credit.
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