How To Buy A Car With Bad Credit – Even Bankruptcy

If you have bad credit, getting a car loan the traditional way can be a major challenge.  I remember several years ago when my credit was less than stellar, I wanted to buy a motorcycle but their in house financing company wouldn’t approve me.   I still got the loan but had to get financing from a different place.

Today I’m going to give you some tips on how to buy a car with bad credit, and how to get a vehicle even if you have a bankruptcy in your past.

Loans

There are plenty of people still willing to give car loans to people no matter how bad their credit is.  Understand that you’ll pay through the nose for this privilege, often above 20%, but that loans are still available.

My recommendation is that if you’re okay with paying high rates, you try to prearrange financing before going to look at cars so you know how much you can get beforehand.

Start with your local credit unions or any local bank that you have an existing relationship with.  The big banks aren’t likely to be too helpful in your quest to get money, but local banks and credit unions (especially credit unions) can be far more accommodating.

If you can’t find financing locally and you have your heart set on borrowing money, then my next recommendation would be to go online.  There are several subprime companies you can work with online and while their rates won’t be low by any means, it’s still often cheaper than subprime rates a used car dealer will charge you if you use their in house financing.

You should have no problem finding a used car dealer that will try to sell you a car even if you have terrible credit, but I would recommend steering clear of them as you can get a better deal if you use the advice in this post.

Another option that you may want to explore is getting a co-signor on the loan.  A co-signor uses their credit to help you get credit and more favorable rates than you could normally get yourself.  The danger to the co-signor is that if you stop paying the loan like you’re supposed to, they can go after the co-signor and it damages their credit too.

Craigslist / Classifieds

This is going to be my recommended option for most people.  I recommend you take advantage of the great deals on Craiglsist.  You can purchase older, but reliable cars for under $1,000 on Craigslist – that’s less than the down payment you’d need for a lot of vehicles.  A lot of people who put their cars up on Craigslist just want to get their vehicle sold quickly and don’t want to spend the money to put classified ads in the paper.

Craigslist is fast and cheap for the person listing the vehicle and many people are willing to make a deal.  My recommendation is that when you find a car you’re interested in, be ready to move quickly and bring cash (having cash helps you negotiate).  Make sure they have the title and take it for a test drive first.

Always negotiate even when the person says the price is firm.  If you really want the car, you can still pay full price but always offer less than what they’re asking, especially if you have the cash with you.

With this option you can get transportation quickly without needing to take out a loan which means no payments and very little hassle.

What to do if you still can’t get a car

If you find yourself just not able to get a car for one reason or another, you’re not without options.  Here are four things you can consider until you’re able to get enough cash or financing together to get a vehicle.

• Rent a car
• Zipcar
• Public transportation
• Ride A Bike / Walk

Renting A Car

If you are in a short term fix or just need to travel for a week or so, renting a car can be an economical option.  Renting a car will typically run about $200/week if you avoid the companies located at your airport.  Most towns will have an Enterprise, Hertz, or even a local car rental company with decent rental rates.

Zipcar

I have a friend who lives in Boston who does this – he uses Zipcar whenever he needs a car.  Now he could buy a car if he felt like it, but he prefers to bike most of the time and only gets a car when he needs it.

The advantage with Zipcar is you don’t have any of the expenses typically associated with car ownership like monthly payments or paying for parking.  If you only need a car once in a while, this can be a good option for you.

The downside to Zipcar is that it’s only available in a limited number of major cities.  If you’re not in one of the areas where they have cars, then you’re out of luck.

Public Transportation

If you’re fortunate enough to live in an area with a good public transportation system, then take advantage of it and use it.  There are some parts of the country where a lot of people don’t bother to own cars and they just use the subway and bus system.

Ride A Bike / Walk

My brother does this.  He’s another one who chooses not to drive.  He has a nice bike (that’s important, get a nice road bike) and just takes it to and from work.  He even takes his bike in the winter on all but the snowiest days (he lives in Minnesota, sometimes, it’s just not possible to bike).  On days when he can’t bike, he just takes the bus.   Keep in mind he lives 10 miles from work.

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