During hard economic times, it is not uncommon to damage credit until getting a car loan approval might seem impossible. Having a car is critical to meet needs such as going to work, school and ultimately getting one’s finances in order.

While it may seem that qualifying for a car loan is daunting with a bad credit score, there is a massive network of lenders and car dealers who are willing to offer bad credit car loans. If everything goes well and payments are made regularly, a car loan can even help recover your lost credit standing.

1. Save up for a sizeable down payment

One strategy is saving for a down payment to get approved for a car loan with bad credit. Overall, a 20% down payment is ideal for a car purchase. But to buy a car with poor or bad credit, you need to put down a larger down payment.

When you put down a considerable sum, you will get approval for your loan more effortlessly. The down payment helps to mitigate amounts you will owe compared to the car’s value or the so-called loan-to-value ratio. The more you save for a down payment, the less risk you pose for bad credit car loans lenders.

2. Examine your credit and find ways to improve it

Your credit score is comparable to a GPA. It is a score that falls between 300 and 850. The lender will be looking at your borrowing, payment, and credit history.

Well before you require a loan, check your credit score to know precisely where your score falls. You will need to know this number to shop for loans since many lenders have a minimum requirement for credit scores.

If you can, you might want to consider putting off your purchase and try to level up your credit score first. Start checking your credit report for possible errors and dispute them when you find any. You can also try paying off debt from loans as well as credit cards.

3. Analyze how much you can afford to spend every month on car payments

Know the budget that you can work with. Check your spending habits over the past few months and list every recurring expense, including debt repayments, housing mortgages, and other bills and expenses. Afterwards, set an amount off how much you can save for other goals such as your retirement. After this, subtract the entire amount of expenses and savings from your monthly income, and you will have an idea of what is left every month. After this, look for a car that is most affordable with the money you have.

4. Seek out a cosigner

If you want to purchase a car with bad credit, you might want to consider a cosigner. A cosigner is an individual who is also listed on the loan and will be held responsible for repayments if you default. Typically, consignors will be parents or relatives.

Having a consignor could considerably mitigate the amount of interest you have to pay and make it more effortless to get approval. But it is a considerable risk to the cosigner. If you miss any payments, it will affect their credit. If they take on your loan, it could impact their ability to qualify for other loans.

But it is possible that once you get a firm foothold on your finances, you can remove the cosigner via refinancing.

5. Make regular payments and use this as an opportunity to raise your credit score

You must see your car loan as an opportunity. It provides you a valuable chance to improve your credit score by making payments on time.

You can even set up automatic payments where you allow the lender the authority to make monthly payments from your bank account. Thus, you will have no chance of forgetting to make a payment. Also, some lenders will provide discounts when you opt for autopay.

When you build your payment history, you will see your credit score rising. Thus, it should be easier to refinance your auto loan or get other loans in the future.