Bad Credit Doesn't Mean No Credit, Buy a Car Today!

There are a number of reasons why you may end up with a bad credit rating but bad credit doesn't have to mean no credit. Although having a low credit score does create challenges, there are ways to make it happen. The following tips will significantly improve your chances of buying a car with bad credit.

1. Know what's in your credit report.

You are entitled to one free credit report per year from each of the major credit reporting agencies. Be sure to review them carefully and challenge any wrong or misleading information; it's not as hard as you think. Knowing what your credit report reveals about you will increase your chances significantly in getting financing for your next car.

2. Pay your bills on time.

If your bad credit is because of not paying your bills on time, it will be very difficult to find financing for a new or used vehicle. To show your commitment to improving your credit score, it's absolutely essential that you meet your financial obligations without delay. This should be done six months in advance to create a more favorable history of timeliness. This will show potential creditors that you are trying and are worthy of financing.

3. Maintain steady employment.

Well in advance of purchasing a vehicle with bad credit, you will also need to maintain steady employment. Without job security it will be almost impossible to get financing on your next car or truck. Most lenders require steady employment for at least six months. It goes without saying the longer you've been employed the better.

4. Go to the dealer with a plan.

Most dealers prey on your bad luck by insisting on a higher down payment and offering a ridiculous interest rate. This happens because many buyers with bad credit often settle on any deal they can get. But this doesn't have to be the case.

Do a budget, know and stick by what you can afford. Be prepared to say no! During economic downturn dealers are feeling the pinch like any other retailer. After you have rejected their offer and begin to walk away you'll be amazed at how fast a sales person can run.

5. Save money for a down payment.

The more money you can "put down" the lower your payments will be. A lower balance makes the loan more affordable for you and therefore more attractive for the creditor. A lower payment will significantly increase your chances of getting financed.

6. Consider something of value to offer as collateral.

Collateral is something of value that can be taken if you default on your obligation. Perhaps you have a savings account, own jewelry or something else of value. Offering it as collateral shows that you are serious about paying off your loan.

7. Watch for dealer incentives.

During times of end-of-year inventory reductions, dealers often offer crazy incentives such as no down payments and zero interest rates. Even though these are usually reserved for customers with good credit, you may still be able to get in on the action. In any case, it doesn't hurt to ask. These types of events almost always create frenzy for buyers and sellers alike.

8. Buy Here, Pay Here.

Finding a dealer that offers "in house" financing is an excellent option if you find yourself trying to finance a car with bad credit. To be competitive many smaller dealers will usually "bend over backwards" to strike a deal. Most don't even require a credit check and quite often understand your dilemma. These dealers in most cases will be happy to sit down with you to devise a plan that will help you rebuild your credit. They are usually glad to report any payments you make on time. This will almost immediately start raising your credit score.