What Causes Bad Credit?
Bad credit can be caused by anything from bankruptcy to being unable to pay bills after a prolonged period of unemployment. It could be due to a divorce, as each side refuses to pay bills like the mortgage on a house you’re going to sell or the car payment for the vehicle they may not win in the settlement. And it can be caused by financial mistakes like overspending, though you may think you can make the payments until your hours are cut or that Christmas bonus failed to come through. Go to this site for car loans to better understand your options.
Why Those with Bad Credit Often Need New Cars
Life goes on, though your financial life is falling apart. For example, you still have to drive to work and take the kids to school. In fact, you may have to drive more as you work a second job or run errands yourself to save money. This means many people under financial stress are wearing out their vehicles faster than everyone else. At some point, those with bad credit need to get a replacement vehicle. This is surprisingly common, since someone under financial stress may forgo maintenance to save money or drive with a known problem because they cannot afford to fix it. Or they decide that a $2000 car repair isn’t worth it, so let’s get a new $3000 car that won’t need to be fixed again in a couple of months. This means many people with bad credit
end up having to replace their cars sooner than those who have good credit. But how can you find a decent car after your credit has gone bad?
Your Car Buying Options When You Have Bad Credit
If you can scrape together the cash, you can buy the most expensive you can afford. The challenge for many with bad credit is coming up with several thousand dollars in cash to pay for a vehicle. When you’re going through a bankruptcy, you may have to continue driving the same vehicle and making the payments to your creditor because you simply cannot sell the car, buy something else, and find another lender to provide an unsecured loan for the difference. For most people with bad credit, the only way they can afford a new or used replacement vehicle is with
financing. Financing a car purchase can give you manageable car payments that fit within your budget or your debt repayment plan. Understand that conventional lenders will charge you a fortune if you have bad credit, though they may trade a high interest rate for high fees paid up front. Or you may end up paying more over the life of the loan by rolling those fees and extra charges into a longer loan term. The solution here is to work with lenders who specialize in car loans for those with bad credit. They can structure the loan so that it is affordable without charging you a hefty premium because you don’t have good credit. They generally have flexible terms, too, so that any new issues that arise won’t hurt your credit. For example, they may let
you trade down to a cheaper or older used vehicle when you can’t afford your current payments so that you aren’t late on your next payment. Or you could set up biweekly car payments to match your pay cycle.