Friday, November 11, 2016, AM | Leave Comment
Your credit score can have a profound impact on how you decide to purchase your next car.
Generally, those with good scores are given the lowest rates, aren’t required to put money down and don’t need a cosigner.
That may not be true if you have poor or no credit. How does this influence how you get financed for your next car purchase?
Do You Have Money to Put Down?
It isn’t always the case that those who have poor credit have no money in the bank. However, that is generally true, which means you may be limited in what types of cars you can purchase.
Instead of buying a new car with advanced safety features, you may be stuck with an older model because you have to make a down payment equal to half of the car’s purchase price to get approved for a loan.
That could be hundreds or thousands of dollars even for a relatively modest vehicle.
What Types of Lenders Will Work With You?
If you have bad credit, you may be stuck with dealer financing or going through an online bad credit lender.
While dealers such as Markosian Auto and others will make sure that you get terms that you can afford, your poor credit or lack of a credit history limits your options for financing.
The good news is that as your credit improves, it may be possible to refinance.
If a traditional lender does agree to work with you, that lender may require multiple payments each month or other guarantees to provide a loan without a cosigner or other collateral.
Can You Find a Cosigner?
The reason why borrowers with poor or no credit are required to have a cosigner when they borrow money is because that person will also be on the hook for late or missed payments.
Therefore, you are asking a friend or relative to commit to making payments on a car that he or she will never drive.
This could limit your options as the cosigner may only be willing to sign the loan if it is an amount that he or she could afford to repay.
If you are in the market for a vehicle, it may be a good idea to check your credit. It could be the difference between getting what you like on your terms and having to ask a friend or lender to bend over backwards to find a way to approve your loan application.
“Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. For more information contact Brooke via Twitter @BrookeChaplan.”