How Do I Finance a Used Car with Bad Credit?

If you're looking to buy a car in Centennial, Denver, or Aurora, bad credit can be an obstacle. While bad credit won't necessarily stop you from buying a car, it can make it more difficult and make it cost more in the long run.

So, how do you finance a used car with bad credit? Check out our tips for getting a used car with bad credit and find out where to go to get the best rate on your purchase.

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Check Your Credit

Before you worry about getting an auto loan with bad credit, find out if your credit score is actually low. Just because you've missed a few payments or have a lot of debt doesn't necessarily mean that your credit is bad, so check your credit and use those scores to decide your next steps.

Improve Your Score

Once you've checked your credit score, look for areas you can improve before you head to the dealership. While some aspects of your credit score can't be fixed quickly, errors on your report, old collection accounts, and other factors can be corrected to gain some points and get you a better auto loan rate when you decide to buy.

Get Pre-Approved

For those with truly bad credit, a pre-approval on a car loan from a bank or credit union could help with the car-buying process. A pre-approval evaluates your expenses, credit score, and income to determine what a lender would be willing to lend, giving you leverage to get a better rate.

Find a Dealership

If you find that your credit isn't great, you can still get a great rate with the right dealership. Dealerships work with a network of lenders and can often provide you with competitive rates and different solutions for your auto loan. Before you shop, find a dealership that has the relationships necessary to give loan choices.

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Save On Your Loan

Once you get your loan, there are a few ways to save more money and ensure you don't get yourself further in debt with your financing:

Choose a short-term loan to save on interest
Purchase a late-model used car, since used cars can sometimes have higher rates
Avoid expensive options and add-ons
Compare rates for your loan
Make extra payments whenever possible to save on interest

By choosing a less flashy vehicle and saving wherever you can, you'll get your credit in a better place for the next time you go car shopping.