Buying a car when you have bad credit isn't always easy. Even if you possess a stable income and consistent employment history, you may find it difficult to secure financing with a low or sub-prime credit score.
While a history of late or missed payments, bankruptcy or repossession may affect your auto loan options, your bad credit rating doesn't have to prevent you from securing a dependable used car. Many bad credit car shoppers find loan solutions that help them drive a reliable vehicle and gradually repair their credit standing.
MaxxDrive Auto is a used car dealership in Glen Burnie, MD, that's committed to helping all Annapolis area drivers obtain a quality automobile with hassle-free financing. We're a Buy Here, Pay Here auto dealer that works with used car shoppers of all financial backgrounds and credit situations.
If you're seeking bad credit car loans for an upcoming used car purchase, you'll want to be well-informed of the financing process before you start shopping. Let our bad credit used car dealership review some tips for buying a car with a sub-prime or poor credit rating.
1. First, Check Your Credit Report Before Shopping
The first thing you'll want to do when considering applying for bad credit car loans is to check your credit report. Go beyond simply reviewing your credit scores with the consumer credit reporting agencies and get a detailed credit report that will tell you what factors contribute to your current credit ratings.
Checking your credit report is a crucial first step before applying for sub-prime financing, as you want to make sure there aren't any mistakes that could negatively affect your chances of loan approval.
2. Look for Ways to Quickly Repair Your Credit
If you've reviewed your credit report and relevant scores and have found any errors, you'll need to address them. Next, you should look for any issues from your credit report that you can remedy quickly. If you have late payments or any other items that you can resolve quickly, do so before applying for that car loan.
3. Avoid Adding Any Bad Credit Items to Your Report
Maybe you have a history of late or missed payments. Or, you're in a good financial place right now, but one or two extra bills could have you playing catch-up. In this critical stage before applying for sub-prime auto loans, you won't want to do anything that could hamper your chances of approval.
Seemingly small actions like setting up auto bill pay or delaying that smartphone upgrade could help put you in a better place financially and from a credit perspective.
4. Explore Current Financing Rates for Bad Credit Car Loans
It's no secret that interest rates for bad credit financing are higher than for traditional loans. While sub-prime car loans are common, that doesn't mean you'll necessarily get a great rate or terms on your financing package.
You'll want to know what type of interest rate to expect going into the application process so that there are no surprises once you apply. This way, you'll be prepared for the higher loan rate that comes with bad credit financing. You'll also know to keep searching if you're offered a rate that seems much higher than the norm for such a loan.
5. Determine What Car & Payment You Can Afford
Know before you go! It's tempting to shop online or on-site at a car dealership and find your ideal next vehicle without first considering what you can actually afford. However, this can lead to disappointment or extending your budget too thin.
We encourage all potential bad credit car shoppers to use a payment calculator to get an idea of what vehicle is affordable based on a desired monthly payment. Estimate a payment by including the vehicle price, your down payment, the APR and loan term.
6. Provide A Larger Down Payment
Bad credit car loans are inherently risky for lenders. If you have faced bankruptcy, divorce, foreclosure or other financial setbacks, it's a sign to lenders that you may be at a higher risk of defaulting on your loan. Lenders prefer to avoid the expensive process of repossessing a vehicle, so they may turn down your loan application.
One way to tip the scales in your favor in the sub-prime financing process is to provide as large of a down payment as you can realistically afford. By providing a bigger down payment, the total loan amount decreases and represents less risk to a lender. Start saving up for that down payment if you're looking to apply for a bad credit used car loan soon!
7. Pre-Qualify for Auto Loans Before You Buy
Car dealerships that offer in-house financing will often let you pre-qualify for financing. When you are pre-approved for financing, you'll know the loan amount available to you as you complete your car search.
Our Baltimore area used car dealership offers financing pre-qualification online via our simple and secure credit application. We invite you to discover your options for sub-prime auto loans by completing our form today.
8. Review All Loan Details Before Signing
It's important to review all loan documents and confirm any details with your lender before signing. If you have any questions or concerns about your loan package, be sure to raise them at or before this stage in the process.
9. Secure Your Loan & Make On-Time Payments
Once you've been approved for financing and sign your loan agreement, you can take possession of your new ride! By securing a bad credit auto loan, you'll not only get to drive a late-model car, truck or SUV, but the loan can help you improve your poor credit status over time. Making your car payments on time each month could lead to a significant improvement in your credit score over the life of the loan.
MaxxDrive Auto is Your Bad Credit Used Car Dealer Near Annapolis
The finance specialists at MaxxDrive Auto welcome Annapolis, MD, area used car shoppers to buy here and pay here. We're home to quality, late-model used cars for sale from top auto brands. Whether you're after a pre-owned Toyota or Honda or a car, SUV or pickup truck or another make, we invite you to shop our extensive inventory now. We're here for bad credit car buyers with our alternative financing packages!