Buying a Car With Bad Credit
If you have a job and some money to use as a down payment, it's possible to get a car loan for most people in bad credit situations. Car dealerships, new and used, will have access to lenders that make auto loans to individuals with poor credit histories. The point to remember is that the bad credit buyer is somewhat at the mercy of the lender, not the finance person at the dealership, who usually will make every attempt to get a buyer with bad credit into a vehicle.
The key to financing a car for the bad credit buyer is the loan to value ratio. The lender does not want to finance more than they can sell the car for at auction if it has to be repossessed. The choice of cars for a poor credit applicant will be limited to new cars with large rebates that can lower the loan amount, or used cars that the dealership owns for significantly less than book value. The buyer's down payment money can also reduce the loan to value and open up the options for available cars.
A dealership that is active in poor credit car sales will know what cars and what financing a buyer can qualify for based on their credit history. A buyer in this situation has little room for negotiation and the best option is to shop at several dealerships and see which one puts together the most attractive package.
A co-signer does not help with a bad credit buyer. A car dealership wants to sell a car to everyone who visits the dealership. Bad credit buyers present problems to the dealership that often can be solved in a limited number of ways. The buyer must look at what the dealer is able to offer and decide if the car, down payment amount, and monthly payment are acceptable.
Buying a car with no credit, or bad credit is possible but be prepared for either a very high interest rate, a longer term to lower monthly payment obligations or the possibility of obtaining a co-signer.