Poor Credit? Here’s What to Do Next | Mobile AL

Financial Tips for Car Buyers with Poor Credit

in Mobile, AL

Are you concerned that your credit score will keep you from buying or leasing the car you want? You’re not alone. Here at Lexus of Mobile, our finance team has worked with many customers who are worried about their credit situation, and they’re ready to work with you, too. Whether it’s your first time buying a car or you’ve done this before, heading into a dealership with poor credit can be stressful. That’s why we recommend taking the following steps to improve your credit before you visit us. Have questions? Don’t hesitate to contact us or stop by in person to speak with our finance experts.

Check Your Credit Score Beforehand

Checking your credit score isn’t pleasant, but you’ll be better off if you know the full scope of your financial situation before you apply for credit. Lenders and dealerships use your credit score and history to determine your creditworthiness, so you need to be just as informed as they are. Your credit score is impacted by the length of time you’ve had your financial accounts (such as credit cards and existing loans), how many accounts you have, if you pay your bills on time and how often you make minimum payments.

Improve Score + Fix Credit Errors

In general, if your credit score is above 700, your credit is considered to be good and you may qualify for low interest rates. If your credit score is below 700, it’s wise to work on improving it before you apply for a large loan. Improving your credit score will help you in the long run, and once your score is higher, you won’t be saddled with the high interest rates you would qualify for with a bad credit score.

To begin, check for mistakes on your credit report that might be dragging down your score. Request a copy of your credit report from the three main credit bureaus: TransUnion, Experian and Equifax. If you believe your report contains errors, you can dispute each error separately. You may see a significant improvement in your credit score once these issues are resolved.

Set a Budget + Get Pre-Approved

Your next step is to create a realistic budget that will help you determine how much you can spend on a vehicle. Your budget will be based on your needs, savings and the length of time you want to make payments. If your family needs a large vehicle, you should expect to spend more. Buying a pre-owned vehicle can help you get the body style and features you want without going over your budget. Don’t forget to factor car insurance payments and an estimate of annual repair and maintenance costs into your budget. Once you’re ready to proceed, apply for financing on our website.

Here’s the Plan: Big Down Payment + Shorter Term

If you were pre-approved, congratulations! Visit us to test-drive a few of your favorite new Lexus models and pre-owned vehicles. You can also chat with our finance experts about your financing options while you’re here. Once you’re ready to make your purchase, we recommend making as large of a down payment as possible (without putting strain on your finances). It’s also wise to agree to a loan term no longer than 60 months. However, circumstances vary from person to person, so our team will customize a plan that fits your specific situation. In general, it’s a good idea to pay off your auto loan as early as possible, as this will positively affect your credit score.

But What If I Got Denied?

If you were denied, don’t lose hope. There are still options available to you. You can ask a trusted family member or friend to co-sign a loan or lease with you. Otherwise, you may have to wait and work on paying off some of your debt before you apply for financing again. Focus on making on-time payments and reducing the amount of credit you’re using. Consistently paying off your existing debt will improve your credit score little by little. Patience is key, as it might take months or even a year or more to achieve the credit score you want. But don’t be discouraged, as the process of improving your credit will pay off in the long run. Remember, our team is here to help, so give us a call anytime to get advice and discuss your financing options in greater detail.

At Lexus of Mobile, we work with customers from a variety of financial situations. If you’re concerned about your credit, stop by our finance department to speak with our team. We’re located at 3024 Government Blvd, Mobile, AL 36606. We proudly serve customers from the Gulf Coast, Daphne and Spanish Fort.