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4 Steps To A Better Car - Even With Bad Credit

In the best situations, a car upgrade is just what you need if your credit is less than ideal. Making those regular payments is one of the best ways to rebuild credit. In the worst situations, the car upgrade can trap you in a cycle of credit-wrecking circumstances that does nothing but harm.

Here's your step-by-step guide to making sure you end up on the right side of the deal:

Step One: Examine Your Current Finances

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If you can't afford the payments on a better car, getting that car loan will simply mean missing payments on the car or missing other payments to afford the to pay the car loan. Either way, your financial situation just got worse. Confirm that you can make the payments, and the maximum size of the payment you're able to make.

Step Two: Shop For Credit

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Do not just apply for financing at the used car lot and hope for the best. Even with poor credit, you'll be able to get a better deal with a little research. Try your current bank, other nearby banks and credit unions, and a few of those "car loan with bruised credit" shops you hear about on the radio.

(Step Two-and-a-Half: Save Up the Down Payment)

A bigger down payment means lower monthly bills and/or getting into a better car. Properly shopping for credit can take a couple of months, so during that time set aside the money you can as if you were already making payments on that better car. Come to the lot with that savings, ready to make the down payment.

Step Three: Shop Terms

If you have to take on a six-year loan to afford the payments on a car, you can't afford that car. Look for loans that last just three or four years, and for the lowest interest rates. The longer the loan lasts the more interest you'll pay and the longer you'll still owe money.Use online resources to find the car you need at the price you want instead of just driving to the local lot and choosing what they have to offer. Don't hesitate to look even 50 or 100 miles away from your home. If $40 worth of gas saves you $300 on your car, that's a great return on investment. And if you are buying a used car, be sure to do your homework for the best deal.

Step Four: Shop Online

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Use online resources to find the car you need at the price you want instead of just driving to the local lot and choosing what they have to offer. Don't hesitate to look even 50 or 100 miles away from your home. If $40 worth of gas saves you $300 on your car, that's a great return on investment.

Whether you need a new car to replace an ailing clunker, or you're upgrading as a credit strategy, this process will help you make the right moves.

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