A Guide to Auto Financing with Bad Credit

When it comes to buying a reliable vehicle to get you where you need to be, here at Nimey’s, we’ve seen all too often how hard it can be for Utica residents with less-than-ideal credit. The truth is having bad credit – heck, even no credit – is much more common than you’d think. Whether you lost your main source of income during the pandemic and are still trying your best to catch up, or you forgot to pay a pesky phone bill back in college, there are many situations that can negatively impact your credit score. Thankfully, the team at Nimey’s doesn’t believe in letting a three-digit number hold you back! Let’s explore a few solutions to auto financing with bad – or no – credit.

The Variables

Before we provide some tips to help you behind the wheel of a reliable vehicle, let’s give a little breakdown of the variables at play you’ll need to know first. The total cost, terms, and interest rate are the major players to keep in mind when it comes to calculating your car payments.

Total Cost. The total cost includes any service fees (which we’re always transparent about) and optional add-ons you’d like with your vehicle.

Terms. Terms typically run anywhere from 2 to 6 years. The shorter the term you choose, the more the upfront costs will be.

Interest rate. Interest rates are calculated as the percentage the specific lender decides to charge for the loan. These rates usually depend on the level of risk the lender is taking on the loan. Factors like your credit score, income, current debts, size of the loan, etc., will determine your interest rates.

Don’t let these variables scare you. While your financing options will be largely dependent on your personal credit and financial situation, there are lots of loans, terms, and rates available for people with varying credit. Not to mention, financing a vehicle is a great way to show how you consistently and punctually keep up with manageable payments, which over time, can really help increase your credit score.

How to Get the Car (With Bad Credit)

Keep an open mind. If your credit isn’t the greatest, this, unfortunately, isn’t the time to get your hopes up about that hot Maserati you’ve been longing for. To get the best auto-financing deal, it’s important to think about the non-negotiables you’re looking for in a reliable vehicle and possibly forgo all the bells and whistles that aren’t all that necessary. Think seating requirements, AWD, cargo space, fuel economy, etc.

Have sufficient equity. Some dealers will try to get you to lower upfront costs. The truth is, if your credit isn’t all that good, providing a higher down payment will increase your chances of getting approved by lenders. We suggest putting down at least 10 to 20% to ensure you get the best terms and interest rates.

Have all the necessary documents. For lenders to feel good about providing an auto loan to someone with bad credit, it’s important you have all the requested documents ready These include recent pay stubs, utility bills, proof of residence, 5 to 6 references, proof of insurance, updated license, bank statements from the last three months, and tax returns if possible.

Have a co-signer. While not always a necessity, it’s a good way to boost your chances of getting a low-interest rate and better terms if your credit isn’t so good. It’s best to find a co-signer with a high credit score of at least 750 as well as a long credit history. This person could be a parent, grandparent or older professional who’s known for consistently paying mortgages, car loans, etc. and has incurred little to no debt.

Get Stress-Free Auto Financing at Nimey’s!

AtNimey’s New Generation Cars, we believe everyone should have access to a reliable set of wheels, no matter what your credit score looks like! Ourexpert finance department is focused on finding you the best auto loans at the most competitive rates while providing top-notch customer service in the process.

Proudly serving customers from Utica, Yorkville, New Hartford, and beyond, we’re connected to a wide range of lenders to ensure your approval. Get started by filling out our pre-approval form orcontacting us today!