Buying a car with bad credit

Buying a car with bad credit

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We're always talking about the benefits of good credit when you make a big purchase. But, what if you don't have good credit and still need to buy a car? Well, you can, but you have to know the pitfalls, and the traps out there waiting for you.  

No matter what kind of credit you have, most of us will need to buy a car at some point.  But, don't aggravate your credit situation with a bad purchase.

Before you leave the house, know your credit score and what the going rate is for your credit rating.  That way you'll know if what you're being offered is acceptable. A the lot, skip the extras when you decide to buy.  Many aren't worth the money and if the salesman pushes them on you, don't be swayed.  With interest, it costs more.

Don't ever drive off the lot without signing a final contract.  If you don't, and instead sign something that says "subject to final approval" then unsavory dealerships can let you drive off, then call you the next day and say that financing wasn't approved and then push up the interest rate.   

Avoid pre-calculated interest which means you pay all of the interest up front.  If you want to sell before you pay off your loan or maybe re-finance, you might owe much more than you realize.

Watch out for penalties.  Know whether you have an early pay-off penalty written into your contract.  You don't want to be charged for paying off your car early.

Don't feel rushed when buying a car.  Take your time and read the contract.  The car is not the only one out there. If you have rocky credit, you should think through the purchase.

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