Buying a Used Car with Bad Credit

Credit difficulties can stifle consumer’s ability to purchase just about anything. Unfortunately bad things can happen to good people. Job layoffs, illness and other unforeseen problems can take its toll on the most fastidious consumer. The good news is that lenders are available for automotive loans for folks with less than perfect credit. You will find that dealers on will have special finance departments to help consumers who are looking at buying a used car with bad credit.

If you know your credit is in need of help, go to and get a copy of all three credit reports. It’s a free service supported by the major credit bureau agencies. This will give you some idea of where you stand and what you need to work on.

Let’s highlight what a lender looks for in helping you reestablish your car credit. Typically a lender will loan somewhere 12% to 15% of your gross income as a payment cap, they will deduct for mortgage or rent to get a payment. You will also need to provide a copy of your most recent paycheck stub less than thirty days old to prove income. Self-employed expect to be asked for 2 consecutive years tax returns and 3 months of bank statements.

Some givens you will have to resign yourself to. You will have some limitation as to what terms and conditions a bank will loan money. Expect to pay a higher interest rate. For instance don’t go in expecting to pay nothing down. Here is why you will need a down payment:

If the bank is going to take on risk to help you reestablish your credit that comes with some risk. The bank is going to want you to participate in that risk in the form of a down payment “have some skin in the game” as-it-were. Some consumers say if they don’t pay the bank will get the car back so why a down payment? If you notice on a banks advertising you don’t see used car ads. Banks are in the lending business not the car business. They don’t want your car back that costs even deeper losses. Storage fees, auction fees, transportation just to name a few costs.

So come to the table with something! You will have a far better chance of getting financed if you have a down payment.

Documents to take to the dealership, if you go prepared the process will go much faster:

  • Proof of Income, paystub less than 30 days old.
  • Proof of Residence, a utility bill in your name at the address you state you live.
  • Minimum 4 personal references name, address, phone. People that don’t live with you.
  • Valid Drivers License.
  • Valid Insurance.

Have a reasonable expectation about the used car you choose. Don’t expect to buy a fancy sports car, be reasonable. You can’t go into this saying “it’s my money I will buy what I want”, reality it’s not your money it’s the banks. Certainly not suggesting you have to buy something you don’t want, what we are suggesting is find a reasonable vehicle (a Corvette™ is not a reasonable vehicle).

As you search for cars from and you narrow down to a couple of choices. Don’t let dealers you shop at pull your credit before you’re ready to say yes. Lenders are the same from dealer-to-dealer. One dealer does not have better lenders than the other. Subprime banks are few and work with most dealers all across the United States. If you get turned down at one dealer, the bank by law cannot approve you at another dealership under the same conditions. So choose wisely and you will be fine.

The loan in this circumstance is one that you simply want to establish a positive pay history. You need to make twelve plus months of payments for it to even rate on your credit. Anyone can make two or three payments; it’s the long haul that matters. Get out over a year and then see what your credit score is. This is why buying something reasonable is so important. You don’t want to risk any chance of not being able to pay the note on time!

Thanks for using, your hometown source for great used cars in Tampa

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