Don't let bad credit stand in the way when you need to make a major purchase like a car. Sure, your current credit situation means you face a number of qualifications and requirements, but while that might not be your ideal scenario, you can still get the vehicle you need. There's a bonus too read on to find out more.

Making the Most of Bad Credit

Here's the bonus to getting a bad credit auto loan: it can actually help build your credit. That's right. This means the next time you need to finance a car, you might just be able to leave all that bad credit stuff behind you.

An auto loan isn't a magic solution to your credit problems and it still takes work to grow and improve your credit. There are several ways a car loan helps, though. It gives you a chance to make on-time payments, and it adds diversity to your credit mix.

4 Tips to Enhance Your Car Buying Experience

In order for you to get the most benefit out of your bad credit car buying experience, there are a few tips you should keep in mind:

  1. Tips for Bad Credit Car BuyingCheck your credit – How bad is your bad credit? Do you just need a few more points to push you into a better interest rate (which is based on your credit score), or are you a credit ghost? If you can't answer these questions you're going to be relying on the lender to determine your credit situation for you, and you might think you need to take whatever deal you’re offered. If you don't know where your credit stands, you're essentially going into an auto financing situation blind. But if you check your credit score and get a copy of your credit reports, you know what the lenders see, and you get the chance to research the kinds of interest rates that are available to people in similar situations.
  2. Prepare a budget – You should know exactly how much you can afford to spend on a car and a monthly payment before you head to a dealership. This means calculating your debt to income (DTI) and payment to income (PTI) ratios. These simple calculations are done by lenders to make sure that a loan doesn't stretch you too thin. Lenders want to make sure a vehicle payment fits comfortably into your budget, and that you have enough disposable income for a loan. Lenders typically cap your PTI at 15 to 20 percent, and your DTI at 45 to 50 percent. To figure out what you can afford to spend, multiply your pre-tax monthly income by 0.15, and by 0.20. This is the payment range you should stick to in order to keep it affordable. To figure out if you have enough available income to take out an auto loan, add up all your monthly bills, including an estimated car and insurance payment, and divide the total by your gross (pre-tax) monthly income.
  3. Be flexible – When you're getting a vehicle with bad credit, it's important to keep an open mind. Remember, now isn't the time to finance your dream car. You're going to want an affordable, reliable vehicle that meets your needs for sure, but picking out a car isn't the first step when you're working with a lender that can get you approved with credit challenges. A good tip in this situation is to make a list of your driving needs, any must-have features, and any "absolutely not" features. This can help you stay on track and find a vehicle on the dealer's lot that's suited to you and fits your budget.
  4. Have a down payment – When you're financing a car with bad credit, a down payment is one of the requirements you're typically not going to be able to get around. The amount needed by lenders can vary for a number of reasons, but they generally ask for $1,000 down or 10 percent of the vehicle's selling price, whichever is less.

Now that you know what to prepare for, you need to find a lender that works with bad credit. Not all lenders can, but those that do work through special finance dealerships.

Finding the Right Dealership

Finding a special finance dealer with the type of lender you need can be a snap if you let us do the work for you! Here at Drivers Lane, we work with a network of special finance dealerships around the country that have lenders that can work with bad credit, no credit, and even bankruptcy.

Don't stress out driving from dealer to dealer – just fill out our simple auto loan request form. Once you do, we'll get the process of matching you with a local dealership that can help started! The process is fast, free, and there's never any obligation, so what are you waiting for? Get started right now!