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Used Car Financing Options for Poor Credit Buyers

Used Car Financing Options for Poor Credit Buyers Image

Buying a used car can be especially difficult if you have had credit problems over the last few years.  Whether due to a job loss, an extended illness or some other circumstances that led to damaging your credit, the fact is that some dealers will not be willing to work with you, even if things have improved of late.  Fortunately, there are some dealers who handle their own financing in house and may be willing to help you buy a good quality used car, albeit with some stipulations.

Dealers sometimes choose to extend high-risk car loans to buyers who have had some credit problems in the past but do have proof of a steady income.  Typically, proof of that income must be presented in order to qualify, and the monthly gross income must be over a certain minimum amount.  Most will also contact the employer to verify the current status of that employment.  Along with proving you do have sufficient income, many will also require proof of a permanent residence, using documents such as utility bills or a statement from a landlord.

Keep in mind that while this type of used car financing may be necessary, the interest rates applied to the loan will be significantly higher than more traditional financing options.  In addition, the penalties for missing or being late with a payment may be somewhat severe.  Before agreeing to this type of arrangement, always read the terms and conditions carefully, and compare them to any other financing options that may be open to you.  Once you are satisfied that the dealer financing is the best option and that you can honour the terms, choose your car and sign the agreement.  Make sure to stay current and retire the loan on time, so you can command superiors rates the next time you need a new or used car.

published: 12/09/2011

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