In general, it is preferable to work with a bank or an auto financing lender rather than the ""buy here, pay here"" dealership down the street. If you end up with a high interest rate on your car, work to improve your credit score so you can refinance in the future.
If you suddenly find yourself without a car, you may be wondering, ""How can I buy a car with bad credit?"" I am aware that not having a ride can present difficulties, such as getting to work or going out. See if a coworker lives nearby and offer to split the cost of gas for a ride to work. Uber is always available as a means of occasional transportation.
You should give yourself a few months to save money and pay cash for a vehicle until your credit improves to the point where you can obtain an interest rate of 6% or less. Your vehicle selection will be superior, and its total price will be substantially less.
Most people overlook car insurance as a problem when purchasing a vehicle with poor credit. Unfortunately, your insurance premiums are also based on your credit score. The monthly cost of your automobile and insurance could be problematic. Waiting until you have a good credit score will also save you money on insurance.
Here is an example based on a $35,000.00 vehicle purchase with a 20% interest rate versus a 6% interest rate on a 5-year loan.
At 20% interest, you will pay over $15,000 in interest on $35,000; at 6%, you will pay around $5,000 in interest. Quite a difference.
Your total interest expense for the vehicle is approximately $15,000.00 less, and your monthly payment is approximately $250.00 less!
Okay, let's play a little game: what if you invested the $250.00 per month that you are NOT paying in interest over the same 5-year period at a 6% rate of return?
You ultimately EARN $3,000 instead of PAYING $1,500. I'd say that's a pretty solid argument for avoiding high-interest auto loans at all costs.
Instead, devote ALL of your resources to repairing your credit. This will put you in a position to purchase with a favorable interest rate and minimal down payment. This will save you a ton of money, and you will not be disappointed!
Buying a new or even a used car is a poor investment, but one that cannot be avoided. As you can see, buying a car with poor credit is an even worse scenario. Ensure you take every precaution to avoid this costly error."""
