This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

4 Steps to Getting a New Car With Bad Credit

NEW YORK (TheStreet) -- Having bad credit -- and these days, lenders see that as any credit score of 660 or lower -- can really crimp your ability to buy a new car.

That said, having bad credit doesn't mean you can't a buy a new car, SUV or truck. It just means you have to be diligent and creative.

According to a report from Edmunds.com, with the right preparation and expectations subprime buyers can secure a new car loan responsibly and even develop smart financial habits to help improve their credit scores for future purchases.

"Contrary to popular belief, there are a number of reasons why a lender would help somebody with a troubled credit history to buy a new car," says Ronald Montoya, consumer advice editor at Edmunds. "If you do your credit homework, shop within your price range and make all of your payments, you'll not only improve your credit score but you'll also practice positive finance habits that will serve you well for years to come."

Edmunds offers the following to tips to help consumers with low credit scores slip behind a new set of wheels:

Start by knowing your credit score. Yes, every journey begins with a first step -- and your first step here is knowing where you stand with credit. Go to annualcreditreport.com where you can get one free copy of your credit report once a year. It's good to spot so-called "risk factors" such as unpaid debts that you can square away, ultimately hiking your credit score. Do this at least 90 days before you start looking for a car.

Get pre-approved. Even though you have toxic credit, that doesn't mean you're out of luck for an auto loan. "Check with your own bank or credit union; it may be more willing to approve you if you already have an existing financial relationship," Edmunds says.

Bring "financial ammunition." Your credit may be in the tank, but you can still bring proof you're a good credit risk. "When you apply for financing -- especially at a dealership -- bring proof of improved financial stability," Edmunds says. "These items may include a recent pay stub, a utility bill and a list of personal references."

Keep the price low as possible. You're chances of getting approved for financing improve the lower you go on price. Plus, as Edmunds points out, "if you scale back and purchase a $17,000 compact sedan, you'll free up $100 per month. This is money you could use for gas, insurance or other bills."

Above all else, don't get down on yourself over bad credit. The problem can be corrected, and you can get a car.

Plus, you're not alone. According to Experian, low-credit buyers accounted for 34.1% of all new auto loans in the fourth quarter of last year, up from 32.8% in Q4 2012.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,805.41 +127.51 0.76%
S&P 500 1,964.58 +13.76 0.71%
NASDAQ 4,483.7150 +30.9230 0.69%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs