Tips For Buying A Car With Bad Credit From Consumer Portfolio Services

It is hard for most people to live without a vehicle, but buying a new or used car or truck with bad credit can be quite a challenge. Fortunately, there are some finance companies, like Consumer Portfolio Services (CPS), that provide financing for individuals with low credit scores and/or a low income. The following are some tips from CPS for buying a car with bad credit.

Check And Improve Credit Score

One thing prospective car buyers can do is try to increase their credit score. They should first check their score by ordering a free report from the three major credit bureaus (Experian, TransUnion, and Equifax). Then they can try to increase their score by paying down current debt, paying bills on time, and keeping old accounts active. Credit bureaus like to see a variety of open accounts that are in good standing. It may not be possible to have a big impact on a credit score, but sometimes even small improvements can lead to better financing terms.

Save Up For A Down Payment

Unfortunately, loans for consumers with bad credit tend to have considerably higher interest rates than average loans. However, borrowers can offset the extra cost by saving up to make a larger down payment. A bigger down payment can also increase the price range of cars a consumer is eligible to purchase.

Know The Going Interest Rate

It’s a good idea for car buyers to find out what the current average interest rate is on auto loans. While borrowers with bad credit can certainly expect to pay a higher than average interest rate, they should not be asked to pay more than twice the average amount of interest. An excessively high interest rate is a bad deal even for a customer with poor credit, and chances are there are better options available.

Choose Function Over Form

Having poor credit may limit the range of cars a prospective buyer can choose from. To get the best car for their money, shoppers should concentrate on things like how well the car works and what kind of gas mileage it gets rather than how cool it looks or how many luxury features it has.