No matter how many times our mothers warned us to pay our bills in full and on time, some of us just had to find out for ourselves what the repercussions for making late and partial payments would be. Surprisingly, we’ve found that our credit cards weren’t cancelled and no one came knocking on the door to collect that brand new TV we bought and couldn’t afford. Nope, instead they hit us where it hurt the most. They lowered our credit score. And because they were so sneaky about it, we didn’t even realize it was happening until it was too late!
If you’ve got a broken down car, can’t get to work, and can’t get financing on a new car because of bad credit, don’t panic. There’s a way to drive yourself out of this mess, and while it may not be in a new Mercedes-Benz, no need to worry. You’ve still got that fancy TV.
First things first. Go online and get a copy of your credit report. Pay the extra fee to make sure the report includes your credit score. The score is reported by three bureaus, so get your score from all three (Equifax, Transunion, Experian).
Beg the Bank
Understand your credit score and decide the best way to proceed. Most banks won’t lend to people with scores below 640. However, if you’re within a reasonable range of that, many banks will still give you a car loan if you have a good history with that particular bank. If you’ve got $1000 cash, go to the bank where you have your checking account and see if that’ll do for a down payment. Depending on how close you are to 640, sometimes only $500 is enough. If they say no, don’t lose hope. Keep pressing on.
Buy in Cash
Depending on how mechanically inclined you or your friends are, you might want to check out what’s available within your cash range. $1000-2000 can often get you a decent 10 year old vehicle. Unfortunately, most 10 year old vehicles aren’t always in the best mechanical condition, so this is where knowing someone who’s good with engines will be of help.
If you don’t know a mechanic, usually it’ll cost you about $50 to have one accompany you to the dealership to do a thorough inspection on the car you are interested in. However, you should make sure he doesn’t have a connection to the dealership to ensure you’re getting unbiased advice. Older cars come with a lot of problems, so you might want to avoid this option and consider buying from a “Buy-Here-Pay-Here” dealership.
Buy from a “Buy Here Pay Here” Dealership
You know that annoying radio commercial? “Bad credit? No credit? No problem! If you’ve got $500 and job, you can ride away in a new car today!” These guys are what you’d call a “Buy-Here Pay-Here” dealership. “Buy-Here-Pay-Here” dealerships will finance a car purchase and keep the loan in-house, so you’ll owe them money, not some anonymous bank in Phoenix or Cleveland.
These dealerships get a lot of flak because they are in the business of selling loans, not cars. They’re taking chances on people with volatile credit and know that most of their customers will eventually get behind on their loans. Therefore, the cars they sell only have to last as long as it takes for the owner to default on the loan. If you buy from a dealership like this, make sure not to leave your mechanic at home. But not all Buy-Here-Pay-Here dealerships are dangerous. Some of the more reputable ones will offer mechanical warranties, so keep your eye out for those.
In sum, if you’ve got bad credit and you need a reliable way to get around, do your very best to obtain financing from a respectable dealership. However, if you can’t, purchasing from a Buy-Here Pay-Here dealer is a slightly better idea than paying for an old beater in cash, especially if you don’t have any mechanics in the family.
About the Author
Brittany Larson is an automotive blogger whose lifetime goal is to have better credit than her parents. She works for European Motors and can be reached via Twitter @brittlarson10.