How do I buy a house or car with poor credit? If you have poor credit, then finding a decent deal on a home or car loan may feel like an uphill battle. Many banks are unwilling to lend to new clients that have a troubled credit history. However, there are still ways for you to finance major purchases like these.
One of the most important things that you can present to a potential loan officer is a portrait of yourself as a responsible individual. Document your income and expenses for a few months leading up to the purchase to show that you can sustain long-term payments. In addition, put away as you can spare into savings account for your down payment and safety net.
Seek Out Reputable Banks
Contact any banks where you have good standing or banks you have previously secured a loan from. Credit unions generally offer loan programs for individuals with poor credit history. They will all have higher interest rates than a loan you would be able to secure with a high credit rating (sometimes substantially so). For either of these, you will need to bring in as much information about your personal finances as possible.
Look for large dealerships that offer in-house financing. They are generally more lenient in terms of credit than other traditional avenues for getting car loans.
Make sure that you thoroughly research the car you are purchasing and price out cars based on what you can reasonably afford each month. Be willing and ready to negotiate with the car dealer to get yourself the lowest interest rate possible.
Save up as much as possible for your down payment and provide proof of your current income to help lock-in the lowest payments possible. Consider purchasing a used car, which are usually easier to find financing for. In addition, a hefty down payment will go much further with a pre-owned vehicle.
Home Buying Tips
Save money to make a considerable down payment, especially if you have a short (or less than impressive) credit history.
Visit many different loan companies to see what kind of deals they will offer you. Some banks are more apt to offer loans to 'sub-prime' borrowers, or those that have a poor credit history.
Do your homework on the price range of house you can afford and make sure you are flexible on this point. Banks may reject your mortgage application for a short history of income, bad credit history and inadequate savings to put towards your down payment. Control these factors to the best of your ability and focus on the variables within your power. For example, if you have poor credit, consider establishing some small credit lines to build up your history.