Are you in need of a new vehicle? Do you have less-than-perfect credit? If you answered ‘yes’ to both of these questions, then you are facing a bit of a financial obstacle. Shopping for and purchasing a new vehicle can be a somewhat stressful experience in general, from determining what car you want and would best fit your needs, to scoping out the best deal on that vehicle, and finally figuring out the smartest payment method for your budget. Add bad credit to the mix and a difficult experience can become nearly impossible, laced with money-hungry dealers, scams, exorbitant interest rates, and disappointment.
However, as a credit union member, you can breathe a bit easier! You have the knowledge and guidance of a trusted financial partner on your side. Just as your credit union has helped you face other challenges along the way, they too will help you finance your next car or truck despite a current lack of credit worthiness. Read on for some important tips from Credit Unions Online on how to juggle the need for a new vehicle with bad credit, and how your credit union can be the key to your next set of wheels without you being taken for a ride!
5 Tips for Smart Auto-Buying with Bad Credit
Believe it or not, just a few points could make a difference in whether or not you get approved for financing. According to buyingacarwithbadcredit.com, the difference in finance rate for a person with a 585 credit score vs. a 595 score could be a full interest point which may translate into thousands of dollars you are paying over the life of the loan.
The following is a breakdown of some commonly used score groupings:
If you happen to be teetering between two tiers, following some simple tips to obtain your credit report, correcting any errors on your report and repairing your credit even slightly might be just enough to send your score up and your interest rate down.
If you are already struggling credit-wise, chances are you’re slightly strapped for cash so you may have to get creative and buckle down a bit. Save any extra you can from your next few paychecks, ask a close friend or relative if they might lend you some money temporarily, pick up another part-time job, or have a yard sale. Remember, every little bit helps in terms of a down payment when you’re trying to convince a lender that you are credit worthy.
Also, if you’re attempting to secure financing through a dealership with a co-signer, watch out for what is known as the Straw Purchase car loan! This scam occurs when a dealer leads you to believe that the only way you will qualify for the loan is with a co-signer. The dealer then puts the vehicle in the so-called co-signer’s name only, leaving you and your chance at restoring your credit out of the equation completely. Simply avoid this by having both signers present at the dealership so both sign simultaneously, or seek financing at your credit union.
Credit unions are known for offering their members lower rates and convenient financing options on auto loans, and working with members to secure the best rate even when they are struggling with obstacles like bad credit. Also, if you are in good standing with your CU, they’ll be more lenient in terms of approving the loan, and even if you have had some minor snafus, they will take all factors into consideration before making their final decision.
In addition, many credit unions are now offering vehicle buying services to help guide members and help them find the best deal as well as the best financing option for their personal situation. Credit unions vary in terms of their vehicle buying services, many offering a combination or variation of expert advisor, dealership partnerships, inventory access, special sales, and more. However, the one common thread among all of these credit unions is a cost free service committed to the members’ best interest. Check out your credit union’s website for details on specific offerings.
Finally, and if necessary, nearly all credit unions offer some form of cost-free credit counseling. If, regardless of your best efforts, your credit is simply too tarnished for you to successfully secure an auto loan right away, your credit union will help you rebuild your credit, get back on track and start fresh with a free, confidential financial counseling program. Many programs offer certified counselors who will help you review your credit report, build a structured repayment plan, and figure out a money management solution.
Remember, your CU strives to serve your financial needs and will work with you to eventually find the right solution for you, something an auto dealership does not have the mind or means to do.By Cyndi Cohen