Just because your credit is less-than-perfect does not mean that you can’t get approved for a used car loan. In fact, taking out used car credit could ultimately raise your credit score as you demonstrate to the creditor that you can make on-time payments month after month. If you fall behind on your car payments, however, you risk damaging your credit even further and losing the car that you worked so hard to pay for. With a little planning, you can avoid missing car payments and ensure that your auto loan helps you get on the road to good credit.
Make Sure You Can Afford the Payments
The most important step you can take to ensure that you don’t miss a single monthly car payment is to make sure that the payments are affordable for your budget. Car deals that advertise “no money down” may sound great at first, but these kinds of deals might come with higher monthly payments. If you have to make a larger down payment initially in order to have lower monthly payments over the life of your loan, the trade-off could be worth it. Taking out a 36 month loan is a big commitment, and you want to be sure that you will be able to make payments next month and every month over the next three years. Before accepting a used car loan for bad credit, do a careful assessment of your monthly income and expenses, and determine how big of a car payment you can realistically afford each month.
Keep Track of Your Bills
Even people who can easily afford to make their used car payments sometimes forget to pay them because they haven’t prioritized financial organization. Keeping track of all of your bills and paying each bill as soon as it arrives in the mail can help you to avoid getting delinquencies on your used car credit account. Whether you prefer to use an old fashioned annual planner or a bill payment app on your smartphone, organizing your bills can help to ensure that you pay them on time and provide you with peace-of-mind. If you’re having a hard time paying all of your bills each month, it’s a good idea to make your car payment a top priority. Bills for services like electricity usually don’t have late fees, but the consequences of missing a car payment can range from higher monthly fees to repossession.
Talk to Your Used Car Credit Lender
As long you are keeping your bills well organized and sticking to your monthly budget, your used car payments shouldn’t overwhelm you. If a payment due date does sneak up on you, or if you realize early in the month that you won’t be able to afford a payment, simply get your phone out and call your lender. Talking to your lender about why you can’t afford to make a payment usually yields much better results than just letting the payment due date pass you by. Used car credit lenders, especially those that specialize in used car loans for people with bad credit, are often willing to work with their customers if they are having a difficult month. A lender might agree to renegotiate the loan terms, change the payment due date, offer a deferment or just waive a late fee one month. However, don’t expect this kindness to continue every month, as several missed payments can still have negative consequences.