Even with bad credit rating and no money for a down payment, you can still get the car you want.
There’s a good chance that there are plenty of bad credit car dealerships in your area; these dealerships specialize in providing auto financing for customers who have a less-than-ideal credit rating and who may be short of cash.
A quick online search of ‘bad credit no money down car dealerships near me’ should give you a list of potential car dealers to visit.
Many of these dealerships give you a wide variety of vehicles to choose from, in addition to car financing options that you can apply for.
If you’re looking to visit a bad credit car dealer soon to buy a car, the following tips can help boost your chances of getting approval for your auto loan.
Having a personal bank account can help make your financial profile look better, especially if you have a bad credit history.
Open a bank account, make regular deposits, and make sure to maintain the account without overdrafts. All this shows that you know how to take care of your money, while regularly putting money away makes you seem capable of paying the loan until the loan term is complete.
This goes a long way in improving your credit rating, too. Keep in mind that your bank balance doesn’t have to be large; your bank account just has to be well-maintained.
According to lending experts, it helps to have multiple lines of credit in your name. For instance, you could get secured credit cards or mobile phone plans or even apply for a small personal loan.
Once you have various lines of credit, make on-time monthly payments. This lets you build an excellent payment history that not only improves your credit but also makes you look like less of a lending risk.
This greatly helps your chance of getting the car loan you want.
Don’t move to another job if you’re planning to buy a car. Stable employment is one of the things that lenders and car dealerships look for when it comes to loan approval.
Even if you have poor credit and no money for a down payment, you have a good chance of getting loan approval if you have a steady history of employment.
This shows that you have a dependable source of income that you can use to make future payments. Job hopping makes you look less reliable to lenders and affects your creditworthiness as well.
Aside from doing a credit check, lenders and car dealerships also take into consideration the duration of your stay at your current residence.
Staying in one residence for an extended period of time makes you look more reliable. Lenders can easily tell from your credit report if you’ve been changing residences too often.
A long list of previous addresses might make car dealers and financial institutions worry about finding you if you end up defaulting on your auto loan.
Consider asking family members and friends to be co-signers for your loan. Having a co-signer for your loan increases the chances of your loan getting approved because the lender gets additional assurance that the monthly payments will continue even if you default on your loan.
A lender or finance company usually checks your co-signer’s credit history along with yours, so you want to make sure that your co-signer has a good credit score.
Your co-signer will have to appear in person at the car dealership to submit required documents and sign paperwork.
Bad credit auto loans usually come with a higher interest rate, but there’s no harm in researching the most common interest rates for these loans.
This way, you’ll be prepared when a car dealership offers an interest rate that’s too high compared to the average. The Internet is a big help when it comes to learning about the current interest rates for most types of auto loans.
You can use the information to negotiate with the no money down car dealer and get a more reasonable interest rate and monthly payment.
You may be tempted to agree to a loan that’s spread out over a longer period of time just to get a lower interest rate, but keep in mind that the interest adds up over time.
The reality is that lenders aren’t obliged to offer you the best interest rate for which your credit rating is qualified.
Research shows that car dealers often mark up interest rates on loans for new vehicles and used cars. One way to counter this is to let the dealership or lender know that you’re shopping around for better rates or that you’ve already gotten an offer from another lender.
This may motivate lenders to give you better rates and loan terms that are more favorable for you.
Buying a car with no down payment can be tough, and it helps to save as much money as possible during the purchase.
This ensures that you have enough room in your budget to make on-time monthly payments and for necessary maintenance and repairs. Here are some money-saving tips to remember.
After you’ve agreed on a purchase price and loan terms and before you sign the loan documents, most salespeople will offer you additional products and services.
The truth is that the prices of these add-ons aren’t included in the final price you’ve agreed on. Make sure to refuse any of these extra services to prevent additional costs, which would only raises the amount of the auto financing you’re getting.
You could end up having monthly payments that are significantly higher than what your budget can accommodate. Staying away from these add-ons will help you stick to your budget and save money in the long run.
Negotiating might seem like an intimidating prospect, but it’s often the only way to make sure that loan terms are favorable for you as well.
Do your research so you can be confident about the value of the car you want and the limits of your budget. If the car you want is out of your price range, try your best to bargain with the finance company or car dealership so you can make it fit into your budget.
Always try to get a lower interest rate, especially if you have the research to back up your offer. Any bit of money you save by negotiating adds up in the long run.
If your monthly payment is $375, round it up to an even $400. This way, you can pay off your auto loan faster and be free from debt earlier than you anticipated.
You’ll also get to save money on interest, since you’ll end up paying more towards interest the longer the payment period is. For many bad credit no money down car dealers, the interest accrues as you make payments and the accrued interest counts into your loan balance.
So more quickly you cut down on your balance, the less interest is capitalized into your auto loan.
This is another way to reduce the interest you’ll be paying for the entire life of the car loan.
Talk to your bad credit car dealership and see if you’ll be able to pay on a biweekly basis instead of a monthly basis.
By making two payments each month, you can drastically cut down the amount you’ll be paying towards interest.