Can You Buy a Car With Bad Credit?
Absolutely. While there are many types of loans, such as mortgages, where a bad credit score can be a barrier to even securing financing, auto loans are one area where bad credit will not keep you from getting an auto loan. Almost all new car dealers work with lenders who will provide credit for people with low credit scores, as do used-car lots, and the price point for the vehicles that you can purchase can range from 100s of dollars into the 10s of thousands, which means that even with bad credit you can probably get the car of your dreams.
The Downsides of Financing
That said, financing a car when you have bad credit is a problem one of the very worst financial decisions that you can make. People with excellent or good credit can often finance cars for 0% to 2.5% interest for periods of up to 72 months. People with lower credit scores can expect to pay more interest and may not have the same loan period. The difference in interest rates for superprime and deep subprime borrowers can be as large as 15% to 20%, which can mean 10s of thousands of dollars more in interest over the life of the loan.
The amount of interest you will pay is not the only downside to purchasing a car when you have bad credit. You also lose your power as a buyer, which can impact you in the negotiation process. Think of it this way, when someone with great credit walks into a dealership and looks at a car, they enter the negotiation process from a position of power. If the dealership cannot or will not accept their offer, they have a credit score that will secure them financing at any dealership, so they can walk away from the deal.
Someone with poor credit is not in the same position of power, since they are probably limited to the dealerships that will work with them. The result is that, in addition to paying more interest, people with poor credit are more likely to agree to higher sales prices for their vehicles in the first place. The takeaway? If you have bad credit and need to purchase a car before you can repair it, you are probably better off buying a car in cash or financing as little as possible and paying off that vehicle until you can repair your credit. Which is why we recommend an auto loan credit repair before making a purchase.
Credit Repair Solutions
When you tackle repairing your credit, it can feel overwhelming. You probably already know some of the steps you can take to change the personal habits that can contribute to a bad credit score. However, did you know that the majority of credit reports actually contain errors that can negatively impact your credit score? Fixing them should be as simple as contacting the credit bureaus to let them know that a mistake has been made, but, unfortunately, the process is a bit more complicated. Let Emerald Credit Solutions help you with auto loan credit repair. Depending on the level of service you select, we can help with everything from correcting errors to helping you get tax liens and other liens removed from your credit report. Let us help put you in the driver’s seat!