How To Finance A Car With A 600 Credit Score Or Lower

Financing a car can be time consuming. First, you must find a car you like, look for a reasonable price to pay, and decide where you will do business. But the longest part of the process is being at the dealership. Whether you are doing back and forth on a price, going through their selection of cars, or the dreadful finance office. For some consumers, financing a vehicle is not a problem. They know they will get the lowest interest rate possible. While other consumers, play the waiting, hoping, and wishing game for a bank to finance them. Since over 94% of consumers finance their vehicles, this is a major piece to the puzzle. Waiting on the bank to finance a person with a credit score of 600 or lower can take hours and sometimes overnight! Don't worry though as I will show you how to finance a car with a 600 credit score or lower.

First: Get Your Credit Reports
The biggest mistake I have seen in 4 years in the automotive business is consumers not knowing their credit score. Or worse, they have an idea they that they may have a low score but set unrealistic car goals to achieve. 90% of top lenders use FICO® Scores With that said, consumers should know where they stand before they step foot in dealership. If you want to see what score the dealership will see and send to the banks, I recommend you get your personal FICO score and reports as soon as possible. Click the banner below to obtain yours.

 

Second: Understand You Will Pay A Double Digit Interest

With a 600 credit score or lower, you must be prepared to pay a double digit interest. Consumers always seemed to be shocked when they see that the interest rate is 12-24% when they have late payments, collections, civil judgments, child support, missed payments, and etc on their credit report. I always say an interest rate with an approval is better than not being approved. Consumers must also understand that lower interest rates are earned through on time payments. 

Third: Keep The Vehicle For Less Than 36 Months (3 Years)

With a high interest auto loan, consumers should try to get a lower interest rate by doing one of a few things. 

1. Refinance The Car For A Lower Rate With Remainder Of Term

2. Refinance The Car For A Lower Rate With Extended Term

3. Trade The Car In

Assuming the consumer has made their payments on time for some time, the credit score should be higher which will get the increase the chances of the consumer to lower rate depending on where their new credit score is.

Fourth: Bring Proof & Documentation

Before going to the dealership, be sure to grab proof and documentation as the bank will need it. You should bring: Proof of Income by 2 check stubs within 30-45 days, Self-Employed should bring 3 previous months bank statements along with the previous years 1099, Proof of address by utility bill or phone bill, 3-6 references, & proof of full coverage insurance. You will need all of these documents as the banks will want to know who you are and where their car will be at all times.

Fifth: Be Prepared To Put A Down Payment On The Car

Notice I said, "prepared to put a down payment" as a down payment may not be needed. Here is a fact for you to consider. Over 80% of consumers with 720 or higher credit scores put a down payment on the vehicle financed. Why is that? So the they can finance less and have a lower payment. This is perfect for someone with a 600 score or lower as this shows the bank more of a commitment from the buyer and puts the bank in a better equity position if the consumer defaults on the auto loan. A good down payment would $500-$1000 as this amount is very common. 

Sixth: Understand The Choice Of Vehicles

Consumers with a 600 score or lower should only look at vehicles under $18,000 or lower as the payments with double digit interest rates can around $430 or higher. Most lenders won't feel comfortable financing more than 18k-20k for a car. Anything more and the lenders will decline the application or expect a higher down payment. 

Seventh: Wait 6-12 Months & Consult With A Certified Credit Consultant

Getting a car with double digit interest rate may not be the route you want to go at the moment and that's alright. While you wait, its important to take this time and learn how to improve your credit score and report. One of the easiest way is to open a new credit card account, keep a low balance or no balance at all, & make your payments on time each and every month. You can find the right credit card for your credit score by clicking the banner below. You can also schedule an appointment to talk with a Certified FICO Professional like myself and learn exactly what you need to do and see results in less than 3 months. For more information, visit my website. 

The Bottom Line

As you can see, financing a car with a 600 credit score or lower isn't that difficult as long as you are prepared for whats ahead and know what to expect. Of course, these steps wont guarantee a bank approval as everyone has a different credit situation and debt balances but, this will most definitely increase your chances in getting approved for a car loan. For more information on this topic or to schedule a consultation about how you can improve your credit score and reports, please visit my website or other outlets such as:  

To learn more about how Calvin can help you raise your credit score quickly contact info@gosimplypro.com.

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