Can I Get a Car Loan With Bad Credit—and Should I?

What if not buying a car is keeping you broke? Yeah, you heard me right. I said it. What if not buying a car is keeping you broke? In this episode, I talk with someone spending. Ready for this?$800 A month on Uber just to get to work. Now they're considering an $11,000 used car loan with bad credit. Is that a bad idea or the one move that might actually get them ahead?That's what we're breaking down on today's show. So let's get right into today's listener question.

Hey, I need your help because I'm honestly losing my mind here. So I'm blowing 800 bucks a month on Uber. 800. I know, I know. Total nightmare, right? No decent public transportation where I live. I work nights.Can't exactly bike in the dark, and my old cars kept dying on me anyway, so I just gave up. Figured Uber was easier than dealing with another broken down Honda. But here's the thing. I make 3,500amonth after taxes.Rent's 550, which means I'm basically living paycheck to paycheck with literally zero savings. And every time I order an Uber at midnight, I. I'm just hemorrhaging money. It's stupid.So I've been thinking about taking out a loan for an $11,000 used car. Yeah, my credit's not great, so the interest rates are probably going to be rough.But even If I'm paying 500amonth on a loan, that's still way less than 800 on Uber, right? I know it sounds like a bad idea on paper, but I keep wondering, is this actually one of those situations where going into debt is the smarter move?Like, am I missing something here? Would love to hear your thoughts on this.

What a great question. And this is one of those situations where the usual advice doesn't fully apply. Most advice says, avoid car loans with bad credit.I don't know how many times I've heard that. But, friend, you got a totally different situation. And you're right. I don't want to see you riding that bike after midnight.Most people aren't spending $800 a month just to get to work. That is a big number. So let's get into today's big idea. You've got a situation you've already said is unsustainable.And the goal here isn't perfection, it's improvement. So how do we get there? We gotta start by acknowledging that your current situation is not sustainable. Let's be honest.$800 On Uber, that's not just expensive. That's limiting your ability to move forward. Now, you said you were stupid. I'm not calling you stupid.I think you're making a decision based on what you have working for you right now. The good news is you're working hard, but a large portion of your income is going to transportation. That's a big number. So that's got to change.We got to figure out a path to change that. But you also have to understand the trade off of a car loan with bad credit.I'm going to give you a great example of this if you've listened to the show. I used to run a credit union. And this credit union, we had a limit that we could charge on interest rates.The most we could charge because we were federally insured was 18% interest. At this one point, we ran a promotion. We were trying to get people to refinance their car loans.I'll never forget, I was sitting in my office one day and one of the loan officers came over and she says, ralph, she said, you're never going to believe this. She said, this particular person is paying 65% interest on their car loan. I said, what 65% interest? I said, that is highway robbery.And I said to her, I said, is the credit good? She goes, no, his credit's terrible, but he does seem to pay us. So guess what I was able to do? I was able to refinance this guy down to 18% interest.I was still making money on the loan, and this guy fell in love with us. Let me tell you right now, he never missed a payment on that loan.But you have to realize something, and you've already noted it, a loan with bad credit does mean you're going to pay a higher interest rate. They may charge you higher cost. It's going to have less favorable terms.I know some local lenders actually put a device on your car that you have to enter a code every week because if you don't pay, they're going to come take the car. Those are things you got to accept. Your credit is where it is because of decisions you've made.But compare that for a second, you could continue to pay $800 a month. You have no ownership, you've got no asset at the end, and you've got no long term improvement. So this isn't just about cost, it's about direction.Which is why I want to encourage you to be strategic. Right now I feel like there's a little desperation in your voice. You've got this $11,000 car option. But this is where wisdom matters the most.You don't need an $11,000 car from a dealership at a high interest rate. And this is what annoys me so many people say, I got to go figure something out.So they go to the dealer, and the dealer says, oh, yeah, Mr. Jones, I can get you this car. I know your credit's a little rocky, but I've got the deal for you. You got to shop around a little bit.Don't just take the first offer because it's so easy. If you've got bad credit, you probably hear no and no and no. And so you go to a dealer and they say, oh, yes, Mr. Jones, we can make this happen.But is it really the right fit for you? Because right now you need something reliable. You need something affordable. You need something that reduces your monthly burden.And hey, you said you found this option for $500 a month for an $11,000 car. $500 A month sounds a little high to me, but it's basically cutting your costs in half. So lower the target and reduce your risk.Go look at some other options. You might be able to go lease a car, even a new car, for that same amount.You might be thinking about, well, they're not going to give me a new car loan. They might actually give you a new car loan as compared to a used car loan. Because with used cars, you never know what you're going to get. But.But before you do any of those things, I want to encourage you to do something else. You said you're living paycheck to paycheck. You've got to build a little buffer here. Because one of the things that worries me.I did a show about this the other day. Somebody got to a point with their used car. They couldn't afford to pay it anymore because they had this repair bill. That's what worries me for you.You might go out there with the best intention and buy this used vehicle. What happens if you have an issue where you got to have it repaired? Maybe you're going to have to pay a down payment.You've got to build some emergency cushion into this. And I know you're not going to like what I'm getting ready to say, but maybe you got to look for other options.Is there someone at work you can ride share with? Hey, if you're paying $800 a month, offer somebody else that works with you half of that.Hey, can you give me a ride to work or do something, even if it's for a short period of time? That you can bank that $800 a month to put some money aside because you want to make sure you're making a good decision.Because if you go into a new car loan with zero margin, you might put yourself into a different pressure point. Because what happens, you buy this used car, and a week after you buy it, it needs a major overhaul. So focus on what this decision unlocks.If you do this wisely, that car can change some things. It can definitely lower your monthly transportation costs.I would be willing to bet that you can go find some reliable transportation that's going to cost you a lot less than $800 a month. But buying a car is going to give you some flexibility and it's going to create an opportunity to improve your finances.One of the things we haven't even talked about is getting a car loan is going to help you. Just make sure you pay it on time, don't miss a payment, set it up for automatic payments.Because this could very well be that time in your life where this is bigger than a purchase, but it shifts your whole situation. But I want to take this a little deeper because being in a situation like this can feel exhausting. I can feel it. I can sense it in your voice.I know you're doing your best, but you still feel stuck. Because you could have said, you know what, Ralph? I can't even get to work. The heck with it. I'm not even going to keep a job.So in all of this, God sees that effort. He sees your desire to move forward. And he's meeting you right here. He's not trying to give you pressure. He's trying to give you guidance.So don't forget to include him in the decision. Just reach up to him and say, lord, help me, make a wise step forward, get me out of this cycle. Because in the end, you're not stuck.You're just one wise decision away from progress. So here's your win for today. You need to define your target clearly.Your one sentence I want you to write down is, I will look for a reliable car under X that reduces my monthly cost. Get online and do some comparison shopping. Go and look at what monthly payments are based on interest rates.Because when you go to the dealer, they don't want to tell you to find print. They just the first thing they'll say to you, and I've done many shows on this, maybe we'll link to some in the show notes.They want you to understand what is the payment you can afford. But that's not the question to Answer Is it reliable car? Is it a good value? And are you getting the best rate for your particular credit situation?Because that clarity is going to protect you from costly decisions. When I want to share a Bible verse with you, this comes from the book of Proverbs, chapter 24, verse 27.It says, Put your outdoor work in order and get your fields ready. After that, build your house. You may be saying, ralph, we're not talking about houses or fields. How does this make any sense?Here's why it makes sense. Wise planning and preparation create a stronger foundation before making major commitments. And that's what I really want to encourage you to do.Go do your homework, go see what the options are on the table and make the best decision for you. How about we pray together? Heavenly Father, we lift up those who are feeling stuck in difficult financial situations.You see their effort, Lord, you see their frustration and you see their desire for something better. I just ask right now that you would give them wisdom to make the next right step. Not to be driven by fear, but to be guided by clarity.Help them to find solutions that bring stability and help them to move forward with confidence. Lord, we just ask right now that you will provide opportunities and open doors and remind them always they're not alone in this.Lead them towards progress. One decision at a time. One faithful decision at a time. And we ask this in Jesus name. Amen. Friend, I want to leave you with this.It doesn't have to be perfect, it just has to move you forward. And maybe today's episode hits you right at home as well. Maybe you've got a situation that you want to talk about. Send me a voicemail.I read every one of these. I listen to every one of these and I want to hear about your situation. And listen, it doesn't have to be a struggle.Maybe it's just something you've overcome and you want to share it with the group of hey, here's what I did, Ralph, and it worked for me. Go to financiallyconfidentchristian.com/voicemail we'll put a link to that in the show notes.But like I said, it doesn't necessarily have to be a question. It could be something that worked for you or just maybe you want to share a win financially.That's financiallyconfidentchristian.com/voicemail as always, I want to encourage you. Stay financially savvy. Don't give up. I know you can do this. May God bless you and you have a truly great day. It.