Steps To Purchasing A Used Car With Poor Credit

Purchasing a used car with poor credit can be easier then you think. If you have poor credit and need a car, don't give up hope. The good news is: Auto loans are one of the easier loans to get with bad credit. The reason is because car loans are secured debt, and if you don't make the payments the lender can repossess your car. The bad news is: You probably won't get the best interest rates or be able to buy the nicest car on the lot, however getting approved shouldn't be a big problem.

Follow these steps to help get approved for your loan.

1. Know your credit before you go out shopping for a car. Check your credit history and know what your score is and see what else is on your report. If you have any out standing judgements on your report, pay off these collections. Be sure to get a letter from the creditors stating that you paid these debts in full. (This letter can come in handy because it may take time to show up on your report that you paid.)

2. Take a serious look at your personal finances, see what your expenses are and what your monthly income is. Based on your finances, decide what you can really afford (comfortably). A general rule for calculating this is, your monthly car payment should be no more than one quarter of your income after expenses.

Next, save at least $500 or more for your down payment, unless you have a car to trade-in that has some equity in it. The more money you have for the down payment, the better chance you have of getting approved.

3. Find a dealer that works with people who have poor credit. Ask for the finance manager and tell them the truth about your financial situation and tell them your credit score. Next, ask them if they have any programs that can help you. If they don't have anything, then move on to the next dealer.

Once you find someone who can get you financed, pick out a car that fits your budget. Once you have your car, be sure and make the monthly payments on time to help rebuild your credit.

If your credit is too bad and you can't find anyone to finance you, then arrange for a co-signer to help you out. Make sure your co-signer has good credit and is willing to help you out. Be sure to make your payments each month so your co-signer has nothing to worry about. If you don't make the payments the lender will go after your co-signer for the money. You don't want this to happen to your co-signer as they usually are a relative or good friend who has agreed to help you get a car.