Sometimes no matter how hard we want to buy something, we feel like our dream has turned into a nightmare. This entire process isn’t simple at all, and most people who have ever tried to purchase something with credit are aware of that.
There’s one basic rule that applies to everyone – if you have a solid credit score, you will obtain a low-interest rate. On the other hand, if your credit score is relatively poor or you don’t have credit at all, then you will be placed into the subprime category.
What does this mean? It means that the lender perceives you as potentially risky, so you are obligated to give more money, which instantly means having a lot of finance expenses on top of the purchase price.
All these facts may scare you a little bit, but that doesn’t mean that you should give up. In this article, we will give you a couple of guidelines that just might make this whole process a bit easier.
The Steps You Need To Take
Knowing your credit score is very important and something you have to get yourself familiar with before starting the shopping process. According to the FICO credit scoring system, any 580 or even lower score is perceived as poor.
Now, your FICO comes with several categories, such as your payment history, the amount of money you owe, and the length of your credit history. This means that everything is being tracked.
Moreover, if you do not make your payments on time, if you have a short credit history or are spending more money than your monthly credit allows, all these things can negatively affect your credit score.
These are all things that need to be considered before you move on with any credits or loans. First, do everything you can to improve your credit score, and then you can start shopping. This responsible action will put you in a better position with lenders.
We mentioned above how important it is to know your credit score. Well, this is equally important too. Why is it so relevant? If you get prequalified for a loan from your creditor, it will manage expectations about what is possible and what isn’t.
Choose a certain financial institution and talk to them about your options. See what’s at your disposal. Moreover, it would be recommendable to look at your credit report and see if there are any debatable items.
No matter how small it may seem, every step that you take is going to help you get a better rate. If you first get approved before you buy a vehicle, you will get another bargaining chip.
Choose A Vehicle That’s Within Your Budget
If you do not have good credit, then, unfortunately, you have to lower your standards and the expectations, at least for now. This applies to RV financing or any other vehicle for that matter. What can you do then?
Pick the vehicle that is going to satisfy your needs but that won’t bust your budget. Bear in mind that you are not in an admirable financial situation, so you do not want to dig any more holes.
Therefore, whilst you’re in this situation, take a vehicle that is perfect for your budget. If you do that, you will easily enhance your credit score because you will pay every payment on time. This means that next time you will be able to afford something nicer. Purchasing an expensive vehicle is going to bury you deeper.
What Else Can You Do?
Do You Really Need It That Much?
This question simply has to be asked. It doesn’t matter whether you are buying a car, truck, RV, or any other vehicle; if it’s not urgent – don’t do it. People with poor credit shouldn’t be embarking on this journey unless they cannot function without it.
Do you already have a car that’s not in perfect condition? If you do, try to repair it. At least that’s a cheaper option. If it’s not an emergency, you should acquire a secured card and spend six months to one year responsibly utilizing it.
A secured card is a great option if you want to build credit when you do not have a credit history. Moreover, it can be utilized to rebuild credit as well. Once you open your secured card, you can deposit in the bank to secure this card. The day you close your account, you will get that deposit back.
Save For A Down Payment
If you do not have a good credit score, this is an excellent option because it can enhance your chances of securing and getting approved for the vehicle loan. That’s why it would be good to set some money aside every month for a down payment.
Furthermore, this can lead to offsetting higher interest rates caused by a lower credit score, and it can also decrease your loan-to-value ratio, which can help you qualify for much better terms.
See What Dealers Have In-Store
If you are yearning to purchase a new vehicle, one of the smartest things you can do is check out the manufacturers such as Kia, Hyundai, Chrysler, or any others to see their programs for subprime borrowers thoroughly. The best way to figure out is to go to their official website and look at their deals. Just keep in mind that you will probably find these deals on the more affordable vehicles, not on the latest models.
Things often seem too confusing and complex when it comes to credits and purchases, especially if your credit situation is not commendable; however, as you can see, you still have some alternatives. Just research your option and choose the one that will best serve you.