There are options available, so you should go into the process well-informed to avoid being taken advantage of.


Your credit rating reflects your borrowing capacity. With a good credit score, you’re more likely to be approved for financing. Lenders can access your credit history and use this to determine whether you’re good at managing money or not. If you have a poor credit history, lenders are more likely to offer high-interest rates on their loans, or refuse to lend you money altogether.

People often seek car finance due to the expensive nature of vehicles. If you have a bad credit rating, you’ll be at a disadvantage when buying a used car. If you have a history of defaulting loans, late payments, and repossession, this indicates to the seller that they might need to repossess your vehicle later on.

But bad credit doesn’t have to impede you getting used car finance for a set of wheels. Fortunately, there are options available, so you should go into the process well-informed to avoid being taken advantage of.

Work on Your Credit in Advance

Assess your credit report months or years in advance of buying a car. By cleaning up your credit, you improve the probability of being accepted for a loan on good terms. To improve your credit score, you can pay off past due accounts and dispute credit report errors. This will add positive information to your report, which will put you in a better lending position.

Avoid Accruing Additional Bad Credit Terms

Be on your best behavior in the months leading up to your loan application. Pay everything on time, because you won’t want to negatively influence your credit rating. It’s important not to commit to new credit obligations such as credit cards. Auto lenders will be concerned by red flags like late rent payments, debt collections, charge-offs, bankruptcy, and lawsuit judgments. Be sensible and avoid your credit rating dropping while also attempting to improve your credit score.

Check Current Interest Rates

Research the average auto loan rates prior to seeking auto finance. This knowledge will put you in good stead, because you’ll know what to expect and avoid being exploited. Be skeptical of any loan rate more than double the average. People with good credit will qualify for a rate around average, whereas people with bad credit will typically pay a higher interest rate. By understanding what’s normal, you can determine how much above the average you’re willing to pay.

Make a Bigger Down Payment

Your credit history will influence the size of the car loan attainable. If you’re required to pay higher interest rates than usual, this will impact the size of the loan you can take out. To combat this, making a bigger down payment can offset taxes, interest, and fees. This can also widen the selection of vehicles available to you.

Understand What You Can Afford to Pay

Establish how much you’re willing to pay before engaging in the process. Stick to what you can afford, because it’s easy to overestimate and be influenced once you arrive at the car vendor. Weigh up how much money you’ll have left over for living expenses. This will help you work out what you can feasibly afford. There are expenses which are priorities over buying a car, which is why budgeting is so important. If you’re approved for a loan with bigger payments, refuse it if you can’t afford it.

This is a featured post by site supporter Claire Peters

Photo: Getty Images

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