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Q: I really need a new car, but my credit isn’t great. Is there anything I can do?
A: The best way to finance a car when your credit isn’t so great is the old fashioned way—through a dealer, where you pay monthly payments until it is paid off and the car is yours.
You can get loans from a bank, but they are less willing to loan to those with bad credit than auto financing companies are.
Make sure the car you are trying to buy is not going to eat up too much of your monthly income—over a fifth and the financing company may start to worry.
If you don’t get approved right away, feel free to shop around for a dealer who will approve you.
Any credit inquiries (financing companies checking your credit score) for the same type of loan within a two week period will be counted as one inquiry, which will not affect your credit score much unless you have a very limited credit history. For most people, this will only be about a five point change, not much when you consider that your score is out of 850.
If you have tried for several auto loans and cannot get approved, you may be maxed out and an auto loan is not a good idea right now.
Do what you have to do to get to work for now. Carpool, ride the bus, or bike, and put away the money you were planning to spend on car payments.
Pretty soon you will have enough to buy a used car in cash. It doesn’t have to be a great car, as long as it runs.
If you keep saving that car payment (or using that money to pay off some credit cards, which will improve your FICO score), you’ll be in a better car in no time.