Financing a new vehicle is rarely easy, but it can be especially difficult if you have poor credit. However, don’t let your credit score stand in the way of you getting a new vehicle! With Mr.Ed of Phoenix, AZ, we have prepared some answers to frequently asked questions concerning financing a new car with poor credit.
What is the best bank or lender for people with bad credit? If you have poor credit, you should consider using a credit union instead of a larger commercial bank. Since credit unions are often smaller and more community-oriented, and don’t have to worry about keeping shareholders or a parent company happy. They’re often more forgiving of poor credit, and more willing to approve members with less than perfect credit scores.
Would it help to find a co-signer? Yes. Having a co-signer is one of your surest bets for getting a loan with poor credit. The most important thing to remember about having a co-signer, though, is that now your credit score isn’t the only one on the line. If you fail to make payments on time or default on your loan, it can seriously bring down your co-signer’s score, so make sure you’re absolutely certain you can stay on top of your payments before you get someone to help you out by co-signing.
Can I explain why I have poor credit? Yes! Sometimes, unexpected circumstances can leave you with a poor credit score that doesn’t really reflect your ability to repay a loan on time.
If you’ve had a medical emergency or other circumstances, you can and should offer that explanation.
What about my home equity? Can I use that to get a loan? If you have equity in your home, you can absolutely use that as collateral in a loan. A home equity loan is different from a regular loan so they can be a good option for someone with poor credit. Just be very careful about over extending yourself with these loans; failure to repay a home equity loan puts your property at risk.
Should I just wait to get a new car until I have a better credit score? Having a poor credit score shouldn’t force you to put your life on hold, and you don’t need to wait for yours to improve to finance a new car. Working to improve your score, however, is always a good idea, and it’s something you can do while you make payments on a new vehicle.
We hope these frequently asked questions have helped you in your efforts to finance your new vehicle! If you have more specific questions, you can Ask Ms. Ed!