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Taking the First Step with Challenged Credit

Ah, the bad credit car loan search. Just having to type it into the Google search box is an invitation to very disappointing self-reflection. It’s only reinforced when you add in your location. Suddenly ‘bad credit car loans’ becomes ‘bad credit car loans Columbus OH’, You’re that much closer to engaging with someone who can help you. But names and facts will be exchanged, and the cat will be out of the bag. You will be acknowledging your challenged credit, and there’s no coming back from that.

 

Breathe.

The simple truth is that you’re showing a willingness to do something about it. The important part is to perform your due diligence to make sure that you’re working with the right lender, dealership, and that you’re making choices that will help you (as opposed to making things worse in the long-term).

 

My Story

I’ll say it. In my life, I have struggled with challenged credit. It’s not because I was a deadbeat, or didn’t pay my bills. It wasn’t that I was lazy, unemployed or irresponsible.

(Okay, if we’re being honest, there were some moments where I might have tiptoed around some of those characteristics, but most of the time I was quite diligent…)

Just as it is with so many others, my credit blemishes seemed small at first; easily manageable and surely repairable. The result of youthful indiscretion, a late car payment here or there, or a few months of making only the minimum payments on a credit card doesn’t seem like a big deal when you’re 21. Tack on a couple of high-interest store cards that were never really necessary, but were helpful in furnishing a bachelor pad. Then, after a few years of being less than responsible with your finances, you meet someone.

All things being equal, she brings her own fair share of fiscal indiscretions to the party as well. Marriage binds your combined bad choices and increases the financial burden exponentially. You do your best to continue working those debts down, but baby makes three, and suddenly you can only do ‘what you can do’. This means more minimum payments and less forward motion. Then little things like car repairs, then the need to buy a new vehicle (or two) comes when you least expect it. You’re young, and there’s a child, so you approach car shopping like you’re checking off a Christmas List. And let’s be honest, you’re ‘keeping up with the Jones’s’ because what your late twenties are. You’re no longer comparing alma maters, you’re caught up on each other’s resumes; but nothing beefs up your status like houses, cars and how good your kids have it.

It doesn’t matter how good your paycheck is, you’re now almost a decade into bad choices. As a result, your payments are way more than they should be, and what credit card offers there are will do more harm than help. Working 50-70 hours a week, and still cutting corners to make ends meet. Unbelievable.

 

More Common Than You Think

I have no intention of enabling anyone to make bad choices. I don’t share these indiscretions for sympathy, or to normalize the poor decision-making of anyone reading this. The bottom-line is that I am an example of someone who never set out to live this way, but it’s exactly where I was ten years ago.

The great news is that you can turn things around (I did). But that will take some time, planning and hardcore diligence. But more importantly, let’s take a minute to recognize just how common challenged credit really is. And let us never forget just how close anyone could be to experiencing it for themselves.

 

As 2018 Approaches

In the latter months of 2017, it was reported that an estimated 78% of full-time American workers were living paycheck-to-paycheck. In fact, 71% admitted to being so immersed in debt that they feel desensitized to it, considering it a permanent way of life.

Taking it further, 56% felt they were ‘in over their heads’ financially, unable to save more than $100 on a monthly basis. In fact, it was revealed that the vast majority of American households struggle to keep $500 or more set aside for unplanned emergencies.

While I don’t mean to diminish those whose story mirrors mine, these statistics paint a discouraging picture for those who live day-in and day-out with a true sense of fiscal responsibility. Despite doing their best, they may have little money put away. Now consider the impact of a major home or vehicle repair, sudden employment or emergency medical crisis.

Without the money to cover it, one might rely on credit cards to pay it off. Interest compounds. If there is even less money coming into the household, a now finds itself unable to afford the lifestyle has in place. The sad truth is that, with little-to-no financial cushion, there is a majority of Americans who are closer to challenged credit than they may have thought.

 

Choose Wisely

When it comes to such vague advise can ‘choose wisely’ it is applicable to everyone, regardless of credit rating. Next, to the purchase of a home, a vehicle might be the most significant purchase one expects to make.

With that in mind, it’s crucial to understand the impact that your purchase will have on your overall budget. This means more than just the ticket price on the vehicle, but includes the APR% that you’re able to get approved for (as well as other line items such as tax, insurance, registration, etc).

We all have a wish list when it comes to our vehicles. Don’t be afraid to set it aside in the short-term to choose a vehicle that might be a better fit for your budget. And don’t be afraid to research lenders. Despite your challenged credit, there are countless options out there. By researching it you’ve taken the first step towards finding the solution that’s right for you.

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