How do I get approved on bad credit car dealerships in Denver, Colorado? How can I buy a car with challenged credit? Well, we give you the essential tips here.
Tips for Getting Approved for Car Financing with Bad Credit
1. Make sure you are open-minded
The worst thing that can follow is if you walk in with a chip on your shoulder with an attitude or just say, “Hey, I’m not going to stray from this idea!”
That’s the horrible idea you can do to rebuild your credit. You gotta recognize street goals in mind when you are buying a vehicle, and you have bad credit, they are:
- to get good reliable transportation
- to get a payment where you can afford
- to rebuild your credit
Therefore come in with an open mind; it’s gonna be better.
2. Have equity
Equity is a big player for everything involved when you’re buying a car.
There are many dealers out there that say $1 or $49 down delivers, or they’ll give you $3,000 more than your trades worth. Remember, those are all gimmicks, and those actually work against you when you’re buying a car, then you have challenge credit.
So equity is critical. 10% is an acceptable downpayment, and 20% is the most ideal downpayment.
The more money you have down, the better it is because it helps out with:
- getting approved
- to help out with a better car
- lower interest rate
- lower payment
- equity position to trade out of that vehicle ASAP to get to a better situation down the road
3. Have all your documents in order
This is key to the bank. So, if they can submit all your documents to the bank, this will allow you to get things done quicker and smoother.
You can focus on more important things in the required time than spending all day in a dealership.
Those documents are:
- pay stub showing income and taxes
- 2 utility bills (as proof of where you live)
- six names, addresses, phone numbers of your family members or friends
- full coverage insurance (proof)
- 1099/self-employed (three months of bank statements) and tax return (possible 2 years)
- three-month bank statement of direct deposit and award letter from the agency (if your income is from the government)
4. Have your driver’s license updated
Your driver’s license needs to be updated to where you actually live or where you’re going to try it. These subprime banks don’t want to see discrepancies in anything.
You’re already coming in with not the best credit, but they’re under the radar, sitting, and looking to buy the deal. However, the banks also looking for ways to say, “Hey listen, we don’t want to take this big risk with this guy!”.
Help yourself in the beginning and do the things before thinking about stepping foot into the dealership.
So driver’s license matching your house of residence. They don’t care if you moved yesterday.
So go to the DMV and get your license updated today with the current address.
5. Make sure you have bills in your name
Many times people don’t have an electric or water bill in their name. So have utilities in your name of the residence that you’re looking at.
A lot of times, banks will set here and ask for proof of residence.
They are electric, cable, water, and cell phone bill, or something to that effect with your name on it and the address that you’re putting on your credit application.
6. Make sure you have a bank account
A bank account is crucial. Many banks want to see bank statements.
So having proof of income is essential. Many times they will want to sure if you have child support or something like that.
They want to see that going into a bank account. Therefore, make sure you have a bank account, not a business bank account but a personal bank account. So if you are a 1099 self-employed person who has a personal bank account and business bank account, it’s gonna only help you in the long run.
Also, have a w-2 job, and 1099/self-employee businesses are some of the most challenging deals to get done.
So, come in with money down is essential. It’s gonna be absolutely best for you, the dealership, and for your credit in the long run.
If you’ve recently filed and completed your bankruptcy proceedings, make sure you have everything and running that your bankruptcy is discharged.
Most importantly, the biggest misnomer is someone’s gonna tell you to go out there, find a credit card, and put some little bit of money on it. Remember that it is the absolute worst thing to do. If banks sit there and see this, you’ve gotten the credit card, and you start putting money on it regardless if it’s $50, or $300, it doesn’t matter, they’re gonna be totally scared.
So if you decide to get a credit card, which is a fantastic idea to build your credit, just put it in the drawer and never use it. Revolving debt is the worst debt to have and the killer to your credit score.
For example, if you have a $300 credit card limit and put $100/month to build credit, it is not. It’s hurting you since that credit utilization is gonna be at 33%, which is over the credit bureaus’ algorithms, and it’s gonna drop your score.
So the goal is to rebuild your credit and get your score up completely. Most importantly, remember to be flexible and keep in mind that the goal is to get good reliable transportation to afford and build credit with those tips.
We hope you can avoid Buy Here Pay Here credit places or independent dealerships that focus on challenge credit or anything like the sub-prime credit market. Since those places typically aren’t so right due to a lot of tactics that they do, and some of them do some shady stuff to get you approved. They’ll lie about income, car options, and all that stuff to put money into their wallet. They’re not helping or sell you another vehicle down the road.
I hope it helps you purchase your next car and makes everything extremely simple with your car buying process. So, those are essential tips for getting bad credit car dealerships Denver Colorado approval.