If you found yourself being apart of the new-class of car buyers whose credit scores have tanked and you're in need of a ride, here are a few tips to steer you in the right direction:
- Bring a hefty down-payment to the table. The more you bring to the table, the lower the risk for the lender. Consider putting down a 20 to 25 percent down payment. This will not only lower your payment, but show the lender that you might be less likely to default on the loan being that you have skin in the game.
- Shop around for financing. Even with questionable credit one should shop around for the lowest possible interest rate based on your credit score. In case you still end up with a high rate, make timely payments so that this puts you on track for a lower rate on your next vehicle.
- Consider securing credit from a credit union, before going to a dealer. This gives you, the consumer, more negotiation power to hopefully secure a lower rate.
- Avoid car mortgages, which are car loans that could stretch-out for 6, 7 or even 8 years. If you're financing a vehicle for that length of time, you're buying more vehicle than what you can necessarily afford.
- Consider paying cash for a vehicle. While this may circumvent the whole financing game, it won't help in rebuilding your credit.
- Consider a new vehicle over a used vehicle. Lenders may offer a lower rate on a newer vehicle and may be willing to finance a new vehicle. However, you may have to consider adjusting your standards. Remember you working on rebuilding your credit. At this stage in the game, image just isn't that important. If you're image conscious, ask yourself: Am I more concern about my image or rebuilding my credit?
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