Considerations for Buying a Car When You Have Bad Credit

Attempting to buy or lease a new or used car when your credit score is considered deep sub prime is a challenge even in the best economic times. There is good news, according to, that buying is getting easier although interest rates remain high for deep sub prime borrowers.

Although dealerships want to move inventory, it’s not necessarily in their best interest to finance someone considered a credit risk without ensuring the investment is secure. Even with easier financing, a sub prime borrower is risky and may be required to provide a substantial down payment, receive a shorter pay off time, and pay higher interest rates.

Consider the following alternatives when buying a new or used car.

  • Save money for several months to use as a bargaining chip. With a significant amount of cash in hand, you can negotiate for a smaller down payment and a better interest rate.
  • Buy a used car directly from a private seller versus a car dealership. Buying from a private individual will most likely be a cash transaction eliminating the need for good credit, a down payment, interest, and monthly car payments.
  • Check with private owners in need of someone to take over a car payment or lease option. The original lender may be motivated in transferring the loan to you to avoid dealing with a possible repossession.

The best course of action, if possible, is to re-establish your credit worthiness and rating prior to buying a car.