Your Options for Buying a Car When You Have Bad Credit

Posted on: March 15, 2019, by :

Bad credit doesn’t mean you cannot buy a car. However, it will force you to do your research and rely on alternatives to the major auto loan providers. Let’s look at your options for buying a car when you have bad credit.

Pay Cash

This option is always available if you have the cash. If you have bad credit, though, you probably don’t have much cash on hand. Selling an old car or receiving an insurance payout after yours was totaled could give you some money, but you have to tap into your limited savings to pay for a relatively new but still used vehicle. The upside is that you’ll own the car outright and won’t have to pay car payments once you buy it. The downside is that you won’t be able to rebuild your credit by making the car payments over time.

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Pay a Fortune for Traditional Financing

Whether you lost your job, experienced a medical emergency or simply fell behind on bills, your credit has taken a hit. Your credit score is low. And the big banks will see you as a major risk for that reason. You can search out lenders that will do manual underwriting and think long and hard about the risk your loan poses. If you can find such a lender, they may consider you a moderate instead of a severe risk, such as when your credit crashed after you lost your job and couldn’t pay the bills though you’re now employed. The challenge here is finding such a lender. Note that they’re not going to charge you the same low interest rate you’d receive if you were seen as a good credit risk, simply an interest rate that isn’t as bad as you’d otherwise be hit with. Every other lender will charge you a high interest rate because you look like a major risk to them. Making matters worse, if you’re late or make another mistake, they’ll either assess horrific fees or kill your credit.

Work with Lenders Who Specialize in Bad Credit Car Loans

Lenders who specialize in clients with poor credit understand the risk that they are taking and design loan products that meet the needs of these customers. They often provide an inventory of affordable vehicles, easy and convenient payment options, and a variety of loan options. Perhaps a weekly loan helps you pay your payments on time. Maybe you need a longer loan term to make the car payments manageable. Or you would be best served by a zero down auto loan. Visit this Hamilton website for car loans for one of the best bad credit, car financiers in Ontario. These lenders understand that your credit is bad, and they often take care to report your car payments so that your vehicle purchase ends up repairing your credit, not harming it. They tend to give you a reasonable rate on any vehicles you exchange, as well.

Bad credit won’t condemn you to driving your current car until it falls apart. Whatever left you with bad credit, know that there are a variety of ways you could find a new or gently used vehicle to replace the one that is falling apart in your driveway.