How to Buy a Car With No Money Down and Bad Credit
Try to get a loan through your credit union., Seek out a loan through a dealership., Explore loan options through “sub-prime lenders.” “Sub-prime lenders” specialize in loaning money to those with damaged credit., Get a cosigner., Research auto loan...
Step-by-Step Guide
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Step 1: Try to get a loan through your credit union.
If you already have an account at a credit union, it is a good idea to inquire there about loans first.
Credit unions are generally more lenient with their qualification requirements than other banks, especially in regards to their members.
If you are not a credit union member, join a credit union and ask about auto financing for problematic credit.In order to open a credit union account, you will need a government issued I.D. and a minimum deposit.
This amount will vary by credit union, but may be as low as $25.
Once your account is open, speak to a loan representative about auto financing options.
They will likely be able to tell you that same day whether or not you are approved and for what amount.
Bring your loan approval letter to the car dealership, who will deal directly with the credit union. -
Step 2: Seek out a loan through a dealership.
Find an auto dealership that specializes in used cars and bad credit financing.
These are often referred to as "buy here pay here" lots.
This type of dealership may approve a car loan for you with little to no money down, but be prepared to pay a high interest rate.
Many of these dealerships can approve you over the phone.
They can also sit down with you in person.
You will need to verify your identity by providing a social security number, birth date, and other information (such as previous addresses).
It is a good idea to call and see if you are approved before you begin shopping for cars. , An Internet search will return numerous sub-prime lenders, and you can often fill out an application online and have an answer within minutes.
Once again, be prepared to pay a high interest rate.You will need to provide identifying information such as your social security number, birth date, and previous addresses.
You should be able to apply for a loan and be approved within 20 minutes.
Bring your loan approval letter to the car dealership, who will deal directly with the sub-prime lender. , If you are not approved for the car loan on your own, another option is to get a family member or friend to co-sign.
This means that the lender (the credit union, dealership, or other lender) will consider that person’s credit score alongside your own.
This can be a good way to get a loan, and as you make payments, improve your credit score.
This can be done through almost any lender (credit union, dealership, or sub-prime).
If you are not approved for a loan through any or all of these channels, speak to them about getting a co-signer.
You will then need to discuss this with your family member or friend.
You co-signer will either need to appear in person to sign the paperwork, or submit identifying information online and signatures. , Knowing the most common loan rates will help you avoid getting blindsided by someone wanting to charge you an interest rate that is too high.
Do some basic internet searches to determine the going interest rates for different types of auto loans, and use this information to bargain with your lender.These rates vary by location and change regularly.
Perform an online search for "average car loan rates in ." Typically, loans spread over a longer period of time may have lower interest rates.
However, as you will paying the loan back for longer, the interest will add up over time. , Before you begin to look at cars, work on getting approved for a loan.
Once you know the amount you have been approved for, shop for cars that fit this budget.
You don’t want to fall in love with a car on the lot only to find out you can’t afford it. -
Step 3: Explore loan options through “sub-prime lenders.” “Sub-prime lenders” specialize in loaning money to those with damaged credit.
-
Step 4: Get a cosigner.
-
Step 5: Research auto loan rates.
-
Step 6: Shop for your loan before you shop for a car.
Detailed Guide
If you already have an account at a credit union, it is a good idea to inquire there about loans first.
Credit unions are generally more lenient with their qualification requirements than other banks, especially in regards to their members.
If you are not a credit union member, join a credit union and ask about auto financing for problematic credit.In order to open a credit union account, you will need a government issued I.D. and a minimum deposit.
This amount will vary by credit union, but may be as low as $25.
Once your account is open, speak to a loan representative about auto financing options.
They will likely be able to tell you that same day whether or not you are approved and for what amount.
Bring your loan approval letter to the car dealership, who will deal directly with the credit union.
Find an auto dealership that specializes in used cars and bad credit financing.
These are often referred to as "buy here pay here" lots.
This type of dealership may approve a car loan for you with little to no money down, but be prepared to pay a high interest rate.
Many of these dealerships can approve you over the phone.
They can also sit down with you in person.
You will need to verify your identity by providing a social security number, birth date, and other information (such as previous addresses).
It is a good idea to call and see if you are approved before you begin shopping for cars. , An Internet search will return numerous sub-prime lenders, and you can often fill out an application online and have an answer within minutes.
Once again, be prepared to pay a high interest rate.You will need to provide identifying information such as your social security number, birth date, and previous addresses.
You should be able to apply for a loan and be approved within 20 minutes.
Bring your loan approval letter to the car dealership, who will deal directly with the sub-prime lender. , If you are not approved for the car loan on your own, another option is to get a family member or friend to co-sign.
This means that the lender (the credit union, dealership, or other lender) will consider that person’s credit score alongside your own.
This can be a good way to get a loan, and as you make payments, improve your credit score.
This can be done through almost any lender (credit union, dealership, or sub-prime).
If you are not approved for a loan through any or all of these channels, speak to them about getting a co-signer.
You will then need to discuss this with your family member or friend.
You co-signer will either need to appear in person to sign the paperwork, or submit identifying information online and signatures. , Knowing the most common loan rates will help you avoid getting blindsided by someone wanting to charge you an interest rate that is too high.
Do some basic internet searches to determine the going interest rates for different types of auto loans, and use this information to bargain with your lender.These rates vary by location and change regularly.
Perform an online search for "average car loan rates in ." Typically, loans spread over a longer period of time may have lower interest rates.
However, as you will paying the loan back for longer, the interest will add up over time. , Before you begin to look at cars, work on getting approved for a loan.
Once you know the amount you have been approved for, shop for cars that fit this budget.
You don’t want to fall in love with a car on the lot only to find out you can’t afford it.
About the Author
Lori Garcia
Brings years of experience writing about crafts and related subjects.
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