You need a car but you are low on cash, and your credit isn't that great. Don't despair! Fortunately, there are a few steps you can take that can help you get the ride you need at a price you can afford. The following are two things that can improve your chances of driving away in a car today.
#1: Set a realistic budget for both cost and loan term
Car loans are a lot different today than they were even 10 years ago. For example, super long-term loans, for up to 10 years, are now common. This may make sense if you are investing in a specialty vehicle, such as a work truck, which you plan to use for a long time, but a loan for more than four years likely isn't a good idea for a normal passenger car. The reason is that you will probably have a high-interest rate if your credit isn't great. If it takes more than four years to pay off the car, then there is a higher chance that you will end up selling upside down on the loan and may be unable to replace the car in the future.
When setting a budget, don't just look at the monthly payment amount -- as almost any car can seem affordable when the loan is spread over many years. Instead, pay attention to the loan term and the total cost you will pay over the life of the loan. Opt for a lower priced vehicle, even if it isn't quite what you want so that you can pay a comfortable amount for just a few years. At the end of this loan, your credit will be better if you paid on time so it will be more affordable to get the car of your dreams in the future.
#2: Prep for success
Prepare for every aspect of the loan process before you start looking at cars. Before visiting car lots, pull a copy of your credit report and look it over. If anything isn't accurate, contest it, so it is removed or fixed before going to look at cars. When you have bad credit, even small fixes can have a major impact on your chances for loan approval. Also, if you are bringing in a trade-in, take the time to clean it well. A well cared for car is more likely to get top trade-in value. Finally, when going to the lot, explain your financial issues upfront. Many dealerships work with lenders that specialize in buyers with poor credit. By being honest, you enable the dealer to better help you find the vehicle that fits your needs, and that will be approved by the lender.
For more information on finding a great car, you can check it out here!