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Is it Possible to Buy a Car With Bad Credit?

Buy a car with bad credit.

Don’t let your bad credit score hold you back from getting a new car. Here’s how you can buy a car with bad credit and get a loan to help you pay for it.

Is it Possible to Buy a Car With Bad Credit?

The average credit score in the United States in 675. This would be considered a ‘good’ credit score.

However, any score lower than that could be considered ‘fair’ and then plummet to poor or exceptionally poor. Sometimes it’s qualified as ‘bad’ depending on the company.

A poor or bad credit score can make life a little more challenging. It’s harder to acquire a loan, buy a home, or even a car with bad credit. Is it even possible to buy a car with bad credit?

The short answer is, yes! But what are the details of that yes? Let’s dive in a see how you can get a car with bad credit.

Buy A Car With Bad Credit: Hard, But Not Impossible

Purchasing a car, even with low credit is doable, though no doubt challenging. Here are a few key ideas to keep in mind.

1. Comb Through Your Credit Score

Before you visit any dealers, you need to have a solid grasp on your credit score and also your credit report. You can acquire your credit report for free and overlook it to make sure there’s no fraudulent activity and better gage reasons where you could improve your credit. If you spot inaccuracies on your report, it could be contributing to your low score.

2. Clean Up Your Credit

Some people need a car right away, but if you don’t, use this time to address those red marks on your credit report. For example, paying your bills on time has a significant impact on your credit score. Making on-time payments can boost your credit score and signals to lenders that you’re trustworthy.

If you’re not in a hurry to buy a car, take some time to evaluate your score and report. It could pay off especially when it comes to ease of securing a loan and the loan rate.

3. Budget, Budget, Budget

Often, low credit scores are a result of a chain reaction in your financial life. Not sticking to a budget, racking up debt, and the inability to pay it affects your score dramatically.

It can be tempting to buy the fanciest car possible but doing so could leave you with a large monthly payment. As a result, if the car payment is out of your budget, your payments could be late. This further destroys your credit.

Go over your monthly budget and bills to determine how much you can comfortably afford before you go car shopping. Researching current loan rates could help you negotiate when it comes time to buy.

4. Research Lenders

Some lenders are very restrictive about who they lend to. It’s recommended that you shop around and research lenders before applying for any loan, especially with bad credit.

Reaching out to your local credit union to pre-apply can make the application process smoother, as credit unions are more friendly to people with bad credit. Take into consideration lenders who work solely with those who have bad credit.

Avoid applying to several different lenders as this creates a hard inquiry on your credit report. A hard inquiry lets lenders know you’re interested in acquiring debt and can lower your score. Knowing this is one reason why researching lenders first are vital.

5. Inspect Your Terms

If you’re approved for a loan, pay attention to more than just the monthly payment, even though that’s the deciding factor for most buyers. A monthly payment amount is one part of your agreement, yet you could be paying more over the life of the loan if your payment is small. You might think you’re getting a good deal (at first), but over time you’re paying more than you want.

5. Save for A Down payment

Stock away as much money as you can to use as a down payment if you have plenty of time before you need a vehicle. A down payment shows lenders or dealers that you’re serious about purchasing a car and making the payments. In some cases, it can even lower your interest rate and also your monthly payments.

If you’re the overachieving type, save up your money and pay for the car in cash. Doing this avoids having to work with lenders, and you don’t want to worry about a monthly payment.

6. Think About A Co-Signer

A co-signer is a person with good credit who signs the loan with you. This seems less risky to lenders because they have someone who will pay the loan if you cannot. Bringing along a co-signer increases your chances of getting loan approval.

There are some risks that accompany having a co-signer. This debt also shows up on their credit report, and their score takes a hit if you cannot make payments on time. The relationship between you and your co-signer could be severed or damaged if you default on your payment.s

7. Shop Where You Can Finance

Some dealerships offer their financing which could work in your favor. In this case, you avoid having to apply to a third-party lender. Certain dealerships work primarily with those that have low credit.

It’s important to note that it’s possible these dealer-lenders offer interest rates that are sky high and could include repossession in their terms if you cannot make the payments. Usually, they do not report to the credit bureau, so using these loans to build your credit is out of the question.

Don’t Let Bad Credit Stop You

If you have to buy a car with bad credit, don’t stress. Even though it might be hard, there are ways to own your car and rebuild your credit.

Are you looking for more information on auto loans? We’re here to help! Here’s some answer to questions you may have.

7 Life-Saving Tips That’ll Raise Your Credit Score Quickly

Do you want to raise your credit score quickly? If you follow these tips, you'll see improvement in your score in no time.

Do you want to raise your credit score quickly? If you follow these tips, you’ll see improvement in your score in no time.

7 Life-Saving Tips That’ll Raise Your Credit Score Quickly

16% of Americans have a credit score of below 579. This is the lowest level of the FICO score and is categorized as “very poor”.

A poor credit score can have a serious impact on your personal life and can affect your business negatively as well.

While no one can guarantee that you will hit an exceptional score, there are steps you can take to improve your credit score.

Here are seven tips to raise your credit score quickly.

1. Check Your Report for Errors and Omissions

The very first step to take is to get a copy of your credit card report. This is the only way to know where you stand before you figure out the specific actions to take to make things better.

This is, however, not all you will be doing with your report. Go through it carefully, checking for any error and omissions.

Look for things like a repaid debt that’s been listed as a default or a loan you repaid on time that is not listed.

If you identify any of these issues, move to have them corrected. This action in itself can add a few points to your rating.

2. Negotiate on Outstanding Balances

You will be surprised at how helpful your creditors can be. Unfortunately, if you never ask, you will never find out.

If you are having trouble making payments, make contact with your credit card issuer and communicate this with them.

Most providers have temporary hardship programs you can take advantage of. The benefit of this is that you can have your repayment amounts reduced until you get back on your feet.

Smaller, more manageable installments mean you can pay a lot more comfortably. This is better than skipping payments and having a creditor send a negative report that sheds a few points off your score.

3. Get Added as an Authorized User

This is a great way of giving your credit score an immediate boost. This works particularly well if you are just starting out and have little information on your credit rating.

You do this by getting someone with a high credit card limit and an even greater repayment history. Their card issuer sends them a card with your name on it.

Legally, you are not obligated to make payments on any debt accrued on the card. But its usage reflects positively on your credit score.

The key is finding someone with above board transactions. In a sense, you inherit the person’s positive credit history.

However, not all credit card companies report authorized users. Before you get on it, do your research and find out if it will be reported.

4. Ask Creditors to Delete Late Payments

It’s not uncommon to fall behind on payments from time to time. However, these small mistakes lower your credit score.

If you are in good standing with your creditors, it does not hurt to request them to delete some of the reported late payments. Financial institutions regularly communicate with Credit Referencing Bureaus, and all it would take is a quick phone call on your behalf.

If the request goes through, then you will have fewer negative reports, which will add some points to your credit rating. Nevertheless, try and restrict your late payments to 30 days. Creditors will not report late dues failing in this time frame.

If your issue is forgetfulness, rather than availability of funds, you can have your banker or employer make direct payments if this facility is available. If not, there are numerous software tools you can use to remind you when your payments are due.

5. Old Debts Can Raise Your Credit Score Quickly

You might be eager to forget about your car loan or student loan debts once you make the final payment.

However, as long as you completed your payments promptly, those records may help your scoring. The same is true for credit card debt.

All you need to do is keep these debts on your record. If they were entirely left out, then provide all the information to the credit Reference Bureau so they can use it to calculate your credit score.

Bad payment histories are deleted with time. However, bankruptcies stay on your report for 10 years and late payments for seven years. You don’t have much leeway with these.

6. Watch Your Credit Utilization Rate

Credit utilization is the amount of credit card balance you have compared to your credit limit.

This is the second largest factor affecting your credit score. The first is your credit repayment history.

The more credit you use on your credit card, the further down your credit rating drops. This trend indicates you are spending a significant portion of your income to repay debt, which makes you likelier to default on payments.

The best credit utilization is 0, which means your credit card limit is untouched. This defeats the purpose of applying for a credit card in the first place.

As a rule of thumb, keep your credit utilization ratio at 30%. This means using less than 30% of the credit limit availed to you. Anything above this can cause your rating to drop.

Under the FICO system, people with the highest scores have a utilization rate of 7%. The lower your utilization, the better.

7. Jump on Score Boosting programs

The average age and number of accounts you have held are an important consideration in evaluating how you handle debt.

This tends to disadvantage people with a limited credit history.

UltraFico and Experian Boost allow people with limited credit histories to puff it up using other information.

Experian requires access to your online banking data and allows Credit Referencing Bureaus to add utility payments to your history.

In the same way, UltraFico allows you to give permissions for savings and checking accounts to be used alongside your report when calculating your credit score.

Consistency Is Key

All in all, while it is possible to raise your credit score quickly, expect a few bumps along the way and allow yourself some time.

At First Financial, we understand that while you work on your credit rating you might still need help from time to time. No matter your credit score, we have a financing solution for you. Contact us today for more information.

Take the Pain out of Monitoring Your Finance

Go from bad credit to good credit without beating yourself up

Can there be any joy in monitoring your finances? Your bank balance is disappointing more often than not. Trimming expenses doesn’t bring any joy. Reminders of irresponsibility can be a gut punch.

Still, a different mindset can help you make the changes to put you on the path to good credit.   

Begin by forgiving yourself for financial mistakes

The shame and blame we heap upon ourselves for not being where we want to be financially can make our situations worse. It leads us to avoid confronting credit spending, recurring debits from bank accounts, balances on personal loans or car loans, and important conversations with family members.

Shame springs from an idea that the individual has departed from social norms. Start dismissing your shame when you understand that one in three others you’ll meet today also have credit under 601. That’s right—one-third of Americans today have bad credit.

The individual experiencing bad credit has lots of company. And is this all their fault?  With aggressive companies relentlessly bombarding us with messages that we deserve their products and that we must keep up with our peers, it’s no wonder we overextend ourselves.

If you can grab your financial issues “by the horns” so to speak, you have made the first

 step on the path to success. Some psychologists tell us that, “a willingness to endure discomfort and capitalize on challenge is a trademark among successful, fulfilled individuals.” While it will require a little effort, put a budget in place, inform those who may impact it, stick to it. You’ll quickly find positive feelings about yourself and your financial situation multiplying. As Benjamin Franklin told the framers of our constitution, “Once begun, half done.” Those quill pens got to writing, despite their enormous task. 

Gamify Your Savings

Rather than tracking every $3 coffee, focus more on a positive indicator: your savings level. As that rises, set a reward after reaching certain amounts. The reward could be you get to buy a new piece of clothing or 10 shares of SnapChat stock. Set these levels up ahead of time and stick to these commitments. These rewards can offset the sense of loss from avoiding day-to-day overspending.

Take the pressure off when you avoid social media

First and foremost, understand that social media is simply carefully selected snippets of your friends’ and family members lives. What they choose to share is designed to elicit envy. Those of us here at First Financial are constantly surprised at friends’ life-is-so-great posts and how these compare to what we know are their real struggles.

What’s more, when you focus on others, you remove your attention from your own issues. If you have bad credit, all your attention needs paid to your spending and savings plans.

Let the social world turn without you when you use a religious tradition, mindfulness, meditation or good old smart reading to understand how pointless it is to compare yourself to friends, relatives.

Deepen Your Relationships when You Lay It All Out for Loved Ones

Serious conversations with loved ones can be intimidating, particularly when they’re about money. Strategize how to take the sting out of belt-tightening before you tackle it with those you love. In other words, have alternate plans to take the place of lavish habits so that your new financial regimen doesn’t translate as 100 percent loss.  

First, explain how it’s important now to join forces for common goals and how these efforts will unite you. Emphasize that working together for financial fitness by cooking meals together, going to resale and thrift shops and competing for better money saving strategies will get you talking and sharing more. Also, make sure you include your family members’ long- and short-term goals in your planning. Study after study reveals that children and spouses prefer experiences and time spent together over material goods anyway. Shared experiences just connect us better and for longer than shared material consumption. Use that research if you have to!

Your new financial fitness system may benefit from gratitude journals. Everyone should jot down at least one thing they’re grateful for every day. Sharing is optional, but when these grateful moments that include others are shared, it strengthens bonds. These journals, particularly effective when an individual is feeling particularly short-changed, have proven to increase happiness significantly.

How to Manage Employee Expenses with Prepaid Debit Cards

We’ve all seen movies depicting employees whipping out the corporate credit card to pay for extravagant meals and entertainment. Business owners shudder at these scenes, and they should. The Association of Certified Fraud Examiners tells us that 15 percent of all employee expenses can be categorized as fraud. In another study, 66 percent of employees admit to abusing the company card with:

  • High-priced dinners
  • Office supplies for home use
  • Mobile phone and app purchases and upgrades
  • Airline upgrades

Another portion admit to inflating transportation expenses, getting a cash refund from an expensed item and even creating a fake expense. These last three are full-on fraud. Still, with every opportunity, some people will take advantage. The credit card with a limit of thousands of dollars just trips some kind of spending wire in some employees. When a card’s limit set at $5,000, a $75 dinner for one seems reasonable.

Business owners can reduce their exposure to “expense padding” and fraud when they give their employees secure prepaid debit cards as opposed to credit cards. Like a teen with a set spending amount, employees must budget within a the debit card’s finite amount.

When presented positively, the prepaid debit card can be just as appreciated by employees as the credit card. Simply explain that the debit card works best for your taxes and/or accounting structure. Make this expense tool a decision based on business goals, not something to keep employee spending in line. Avoid mentioning potential expense abuse or fraud all together.

Other benefits of the prepaid debit card for business includes:

  • Easy availability: get instant approval from the best online sources. With online banking now as secure as traditional, bricks-and-mortar banking, anyone can apply for and receive prepaid debit cards within days of ordering. Pay using your credit card or business bank account.
  • No credit card dings: prepaid debit cards do not intersect with your business’s credit rating in the least. From the moment you buy it until the moment the employee spends the last $5, the debit card involves only up-front cash transactions.
  • Convenience: Prepaid business cards are accepted everywhere the issuers’ cards are accepted. In-store, online and phone purchases all work with a prepaid debit card.
  • Better employee spending controlLoad the card with a set limit of money and task the employee to stay within that amount. As with a credit card, debit cards allow you to track exactly what the employee spends. Some companies even let you monitor business card transactions from your computer or mobile app. Business owners can even freeze and unfreeze the debit card as needed.

Prepaid Debit Cards Control Employee Spending So You Don’t Have to!

Some businesses choose company credit cards rather than debit cards because of the potential for rewards and the lower fees. Debit cards can also come with more fees than credit cards. Still, when compared to the financial losses due to abuse, these fees are negligible.

When a small business becomes a mid-sized business, expenses accounts follow quickly, especially for sales professionals. Then, additional office locations can mean travel expenses. Debit and credit cards empower employees to make their own decisions while keeping spend under control.

How to Keep Cash Advance Costs Low

Because cash advance interest rates can start accruing on the first day, the borrower’s best strategy is paying the amount off as soon as possible. If that means two days, at least this loan is behind you. Thank it for:

  • Allowing you to pay other bills on time with no penalties.
  • Preventing any late payment notices from going to the credit bureaus Experian, TransUnion or Equifax.
  • Helping you get your car or computer fixed so you can keep earning money.
  • Your freedom to jump on a cash-only purchase you’re competing for.

Pay off the online cash advance fast by linking it with the checking account where your paycheck gets deposited. That way, the minute that paycheck goes in, the cash advance gets paid off. If you use your checking account as the hinge between your income and your loan, highest interest payments come out first. Borrowers can thank the CARD act of 2009 for that backup.

The second way to save on cash advance costs is to borrow as little as absolutely possible. With interest accruing daily, the smaller the amount, the less the interest.

Finally, if you don’t pay the cash advance off within days, you must pay it off on the date you initially agreed to. Rolling over a cash advance sets you up for additional fees on top of the interest rate you get charged daily. The worst situation to get into is if you’re only paying off the cash advance’s interest month after month. Have more questions? Get answers to the most common on our cash advance FAQ page.

Think you can manage a cash advance responsibly? Apply today!  

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