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Plan for buying car now with bad credit -- Realistic?
After reading the forums here, and in need of a car, I've decided I need a plan to buy a car now with the credit challenges I face rather than waiting till the end of the year when my credit will be better.

Long story short -- I have a 578 score with Experian after losing 8 points on Monday when I was approved for a $200 Capital One secured card. The major negative is a state tax lien (I paid off and satisfied two others this month, one already deleted by Experian). There are also some old medical bills. Neither Equifax nor TransUnion have a score for me since I have no recent credit history. I've been self-employed for 14 years with steady income growth to $45,320 this year. I have no credit balances and have a DTI of about 32%. I've been renting a home from my in-laws since 2000.

So, here is what I'm thinking:

Buy a car in the $10,000 to $15,000 range with a downpayment of 10%

Keep payments in the $200 to $250 range

I believe the vehicle needs to be a 2009 or later with less than 75,000 miles to have a realistic chance of refinancing the loan I'm likely to get in a year

Yes, this limits the pool of vehicles I can choose from, but I have found about a dozen possibilities online in my area.

After reading through the forums here, and since I'm not a member of a credit union, it seems my best options for buying a car now would be Capital One and RoadLoans, and maybe Honda and Toyota Financial, although a couple of dealers (CarMax and a local dealer) say they have found financing for buyers with worst credit than mine in the past.

So, I'm thinking about applying to Capital One, RoadLoans and CarMax to see what happens.

How realistic do you think this plan is, and is there anything I could do differently to get a car now given my situation?

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It may be a good idea to explore credit unions further. Many these days have no requirements for joining, other than living or working nearby. It's really beneficial to have your financing lined up before you go to a dealership, either way. That way you reduce or eliminate the chance of being talking into a vehicle you can't afford.  If you tell a salesman what you want your monthly payments to be, they may pressure you to sign up for a high interest loan with a very long repayment schedule. Choosing a loan that will save you money in the long-run is smart.

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It could happen.

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I would do more research into credit unions.  They off much better rates that any of thos other lenders. 

I opened an "Emergancy Savings" account with my credit union ($500)  and less than 2 weeks later i was offered a $23000. loan at 2.87%  by mail.  My score was just a few points higher than you say yours is.  I'm in the same boat being self emploeed. I was also recovering from a massive fire that destroyed my business and a lot of debt from that. 

The other option is to go with a higher down payment. If you can save 25% to 50% you would need to qualify for a smaller loan with higher collateral value.  Looks better to lenders. 

Good Luck!

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Update -- Plan to buy new car ...

Thanks for the advice Eddy and Hogwart. As an update, I now have a 664 score from Equifax after verifying my identity yesterday. EQ doesn't have many of the old medical bills and parking ticket that Experian and TU show. TU is also showing a 0 now instead of a 3F. And Experian deleted, not just updated, one of the state tax liens I paid off earlier this month.

In addition, in looking at the vehicles we could purchase at this time from all the dealers in our area, none really match our needs at the price level we'd have to purchase at to keep the payment where I want it, so I've pushed the car buying decision off until next month to pay off the remaining state tax lien and get more for a downpayment.

So, for credit unions, I've not been able to find anything on the local credit union web site about how long you have to be a member before applying for a loan. Is there normally a waiting period before applying?

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