Hi, alot of dealerships specialy franchise dealerships can get you approve with no problem because they deal with hundreds of banks but the problem is that they want a huge interest rates as high as 29%. If you really need a carbad which it seems like you do, you can always buy the car at the best interest rate that your credit would let you and pay for about 12 to 18 months and you can refinance the loan to a much lower interest rate. I've been through alot of dealership experiences and my credit was very bad. I bought a 14K car was approved but with $3500 down, so the rule of thumb is whatevr you buy, figure to get approved you would probly have to put down about 30% of the selling price of the car. When yoyu go to the dealership, make sure you tell them what you can afford to put down and that's it and see what they can do. Most likely they'll come back and say well your gonna need about $1500 down for a $5000 car. The reason for that is, the bank want you to make some kind of investment in the car and less risk for them, so if the car get repossed, they will have equity in the car and can resell it and still make money. Anther option is buy here pay here, this should be the last resort, usually buy here pay here wants you to put down a huge down payment and then want you to pay weekely, bi-weekly or monthly. The down payment that they want you to put down is really the price of the car they paid at auction so that means they got their money back for the whole car just by your down payment and the rest of the payment is really profit for them, that;s how they work. But I'm sure you'll do fine so good luck!!
I meant to update but totally forgot. The dealership was a bust. The only car they would show us was WAYYYY outside our price range. It was a 2008 Dodge Avenger for $10,000. The salesman gave us some BS saying that the bank wouldn't finance anything cheaper. He said they *could* approve us but they'd need a $1400 downpayment and we only had $500 at the time. We declined and left. We have $650 in savings right now towards the car and are saving $85/week until we get approved somewhere. I really want to stay away from buy here pay here but at this point, it feels like the only thing we're gonna get.
Any advice? We've tried Cap 1, Road Loans (they said they don't serve Indiana) and our credit union (couldn't finish the app because we don't have collateral).
The $650 savings is specifically for the car. We have other emergency savings. In fact, we put $300-500 in savings per month from my self-employment income. For reference, our monthly expenses (before we buy this car) are about $1100 and our monthly income is twice that. The only reason we don't have more towards the car is because we got way behind when my husband lost his job and we were playing catch up for awhile after he got this one. That's why we're playing it safe by trying to get a super affordable vehicle and putting tons of money in savings.