What If I Don't Qualify for a Car Loan?

Denied stamp on a car loan application

Tetra Images / Getty Images

When you need a car, and you have poor credit, you have very limited options. You can purchase a car at a lot that will finance the loan for you at exorbitant interest rates or save up and pay cash for a car. Unfortunately, it is not always practical to rely on public transportation, and there are parts of the country where you need your own car to get around. Additionally, if you work odd shifts, you may have a difficult time taking the buses to work.

Can You Get By Without a Car?

The first option is to consider repairing your current car or finding a way to make do without a car for a short period of time. If you are married or part of a couple, you may be able to get by with using one car for a short period of time while you save up for the repairs.

If you do not have this luxury, you may need to see what you can do to get by without a car until you can save up money. You may be able to carpool with a coworker and chip in a bit of gas money to help cover the inconvenience on the part of your coworker. You may also ask family members to help you out with rides for a short amount of time.

Can You Make Do With a Cheap Car for a Short Time?

Another option is to buy a temporary car that can hold you over until you can clean up your credit and save up a down payment for a nicer car. If you look carefully, you should be able to find an old car that runs with higher miles on it. Many cars will last well over 200,000 miles, as long as you are willing to make repairs.

You can set aside money each month to help cover the repairs, which you can use to purchase your next car when you decide to buy it. As you look for this type of car, you need to remember that you are looking at the engine rather than at the exterior of the car. You are more likely to find this car through a private seller that lists online or in the classifieds. The car insurance may also be cheaper since the car is older. 

Can You Buy a Car Through a Lot That Caters to Poor Credit?

Your last option is to purchase a car through a lot that will finance the car for you. This should be your very last option because the interest rates are usually exorbitant. However, if you really need the car to get to work, and you can fit the payment into your budget, you may choose to do this to help rebuild your credit. You can work on cleaning up any other credit problems and then refinance the loan as soon as you are able.

If you choose this option, you should buy the least expensive car that you can because you will end up paying much more than the car is worth with the high interest rate attached to it.

Start Planning To Make Your Next Car Purchase Easier

Since a car may be a necessity, depending on your location, you should set up a sinking fund for your car now. This means that you set aside a little bit of money each month for repairs and to use towards purchasing a car in the future.

If you still have a car payment, it may not be as much money, but if you do not have a car payment, you can set aside the amount you were paying on your car each month. The money will add up more quickly than it took for you to pay it off because you are not paying interest on the principal.

If you have an older car that will need repairs, you should be setting aside money each month to help cover the cost of your repairs. Doing routine maintenance on your car will help it last longer and help you avoid some expensive repairs in the future.

Was this page helpful?
Related Articles