Car buying can be especially frustrating when you've never done it before. Because it can be complicated and stressful – especially if you’re financing with an auto lender – it helps to know what steps to take ahead of time.
There are a number of things you need to take into account when you’re car shopping, including the make and model of a vehicle, the sticker price, and the lending process. If you’re new to the car-buying process, we're here to help you with the basics.
The steps to buying a car differ depending on whether or not you have good credit or bad credit. If you're not in a position to follow the steps above, the process is a little different when you visit a bad credit car dealer.
There can be a lot of things to prepare for when it comes to buying a vehicle. Car shopping is a long process, but if you have good credit, you're on your way to an easier time than someone with bad credit, typically.
If you have a good credit score and you’re car shopping, the process usually goes like this if you intend to buy at a dealership:
The car buying process can change depending on your credit situation, and how you’re financing. Many people with good credit credit union for an auto loan and get pre-approved even before they visit a dealer. Pre-approval means these borrowers get qualified for an amount from their financial institution, and once they have that, they can shop at a dealership like a cash buyer.
Good credit borrowers also have a better chance of getting financed through a captive lender like GM Financial and Ford Motor Credit. Captive lenders usually finance borrowers with good to great credit scores and can offer great deals and low interest rates on certain vehicles.
In the case of a bad credit borrower, you first need to find a dealership to work with. If your credit score isn’t the greatest, you may have better luck getting financed with a subprime lender. Vehicle choice will depend on the amount you're approved for, so picking out a car first won't work.
The car buying process as a bad credit borrower usually goes like this:
The bad credit lending process takes a few more steps, but subprime lenders look at more than a credit score during the loan process, including your income, job and residence stability, debt-to-income ratio, and more. You need to verify the information with things like check stubs and utility bills, and you also have to provide a down payment.
While working with a subprime lender may take a few more steps, and you don’t choose the car in the beginning, a subprime auto loan can serve as a second chance at financing or as a new borrower's first step in building their credit history.
The car buying process can feel overwhelming, but everyone starts somewhere. Many borrowers start their credit history off strong with an auto loan or use a bad credit car loan to improve their credit score. Doing this can help them improve their chances of getting better rates for all varieties of new credit in the future.
If you’re struggling with credit issues or you’re a new borrower who’s looking for their first auto loan, start with us at Auto Credit Express. We have a nationwide network of dealerships that have special finance departments with lenders who work with all borrowers in all types of credit situations.
Fill out our free car loan request form, and we’ll look for a dealer in your area!
Typically the best time of year to buy a car is considered the end of a model year, when vehicles may be discounted to make way for new models. However, you should always do your homework, as different manufacturers run different specials throughout the year.
There is no set minimum credit score needed to purchase a vehicle, but the process is typically easier the higher your credit score is. Some lenders are known for working with borrowers who have lower credit scores, around 580. Most lenders would prefer to work with borrowers that have a score of around 670 or better, which is considered good credit, though.
The amount of money you need to save before buying a car depends on how expensive a vehicle you're planning to purchase. It's a wise idea to save at least 10% to 20% of the car's selling price as a down payment in a typical situation. However, if you're facing bad credit, the typical down payment amount is a minimum of $1,000 or 10% of the vehicle's selling price.
Leasing and buying both have their merits and the right choice for you will depend on your situation. If you're in a bad credit situation, leasing is likely out of the question, as it typically requires good credit to qualify for. Remember, if you lease your term will only be around two to three years, and then you'll have to get another vehicle, where a purchase means you own your car until you decide.
Senior Automotive Financing Editor
Meghan is expertly versed in automotive special financing and pricing analysis, having published hundreds of articles on Auto Credit Express and its sister sites, CarsDirect, and The Car Connection over the past decade. She began her career as a sports writer for the local newspaper in her hometown nearly 30 years ago, and has enjoyed writing ever since. Read more
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