Just because you don’t have a perfect credit history doesn’t mean you can’t finance a new or pre-owned vehicle. In 2012, the average credit score for someone financing a used vehicle was 659, four points lower than the average in 2010.

If you find it difficult to secure financing, follow these 5 tips to get the vehicle of your dreams.

Check Your Credit Report

You can get a free copy of your credit report once a year. Get your copy so you know what your credit looks like before you start talking to dealerships or lenders. According to some sources, the credit reporting industry has a 20 percent error rate. If you find a mistake on your report, contact the agency to correct the error. This could have a big impact on how much interest you pay when you finance your car.

Talk to Several Lenders

Your checkered credit history will immediately turn some lenders off. They wouldn’t want to help you finance a purchase even if you were willing to pay a ridiculous interest rate. Others won’t see certain credit dings as a big deal. They know that everyone makes mistakes, and they’re willing to take some risk to make money from your loan. Talk to several lenders to make sure you get a good deal. Remember, you can finance a Lexus or other vehicle through a dealership, bank, orĀ  credit union. You have plenty of options to consider!

Ask Your Employer About Car Financing

Some employers have loan financing programs that help workers purchase cars at affordable rates. If you work for a business that has one of these programs, get information so you can compare it with other financing options. Make sure you talk to your HR rep about potential financing programs. Your employer might have one that it doesn’t advertise widely.

Take Someone With You When Exploring Your Options

Description: http://i2.wp.com/farm5.staticflickr.com/4033/4596463191_bfdf9d25b9.jpg?resize=500%2C334Image via Flickr by bpsusf

Talking to lenders could cause stress and worry. Some people get so preoccupied with whether they will qualify for a car loan that they miss important information while talking to loan officers. Having someone with you gives you an extra set of eyes and ears to nitpick offers. The other person can also act unimpressed or critical of offers. This strategy works best with a confident person who has some experience with negotiations.

Don’t Focus on Monthly Payments

Some lenders will focus on how low they can get your monthly payment. A cheaper payment might sound appealing, but it almost always means spending more money overall. Do the math to see how much money you will spend on the car by the time you own it outright. It usually behooves you to take a loan with a shorter term even though that means making higher monthly payments. If you really need to add a couple years to your loan term, then you should rethink spending so much on a vehicle. Look for cheaper options so you won’t get buried under years of payments.

Have you found ways to get good financing without perfect credit? What advice would you give to people buying their first cars?

Enhanced by Zemanta