What's the best way to quickly get a car on low budget with a poor credit score?

Question

I am starting a new position somewhere that I'll absolutely need a car, so I have to buy one. But I have a poor credit score, so the best APR rate I can receive is about 18%. That means financing a car isn't really an option for me.

I also have lots of expenses in the coming few months because of moving etc., for which I need to use a large part of my savings, so I'll be left with little cash in hand. The only cars I could afford to buy without financing (i.e. buy it out at once) would be some old affordable car, say a 2008-2010 Nissan or Hyundai with at least 100k miles mileage.

I'm new to the US and never owned a car here, and even before coming here I had a car only for a very short period, so I'm totally agnostic about car maintenance and expenses, especially in the US. I'm also not a handy person at all and can't do the simplest diagnosis or repairs myself (I barely know how to fill in the tank of a car!). Also, I'm totally unfamiliar with car leasing, which I thought might be a more affordable and suitable option right now, despite the total loss, if my low credit score wouldn't be a problem for leasing (as I said, I have no idea how that thing works, so don't know if credit score matters for it).

So, I am looking for advice on how to make this work. In particular, I'd like to ask for some information and your opinion on the following:

1. Will I be able to finance a <6 year old reliable car for less than 250$ per month with a low (very thin) credit score?
2. What would be the total cost, including insurance, maintenance, and fuel, for an affordable 2008 sedan or compact car (e.g. a Hyundai Elantra) with ~120k miles on the clock. In terms of usage, I think in average I will be driving ~40 mins per day in the city/suburb during weekdays, and ~2 hours on the road in addition to that during the weekends.
3. Do you think leasing would be a better and more affordable option for a year or two or buying an old car?
4. Any other suggestions (other than "don't get a car")?

Keep in mind:

• I know ideally I should wait 6-12 months to build up credit (which I hear should be quick, given I never had any major debts, only one delayed ~50$ bill in my entire credit history) and then finance a car with a reasonable APR, but I can't do that, because I'm moving to the new place soon, and I'm definitely going to need a car there from day one. The place I'm moving to is one of those that you can't even find a CVS or Walgreens inside the town and you have to drive 10 minutes on the road to get a bag chips!
• I went over the answers to this question, because I was thinking about having a co-signer. First, if that's an option, I'd appreciate some information on that. Second, the answers were terribly disappointing and potentially offensive! I have poor credit score, but that doesn't mean I don't pay my bills or always take loans and don't pay them back. The only delayed payment I ever had was a 50$ mobile bill that I just forgot to pay! It's disappointing how some people immediately judge you because of your credit score.

Answer 1

I'm totally unfamiliar with car leasing, which I thought might be a more affordable and suitable option right now

Leases aren't an "affordable" way to get a car. They're a way to get an expensive car that you can't afford to buy outright. It's effectively renting a car, so you have nothing to show for it after the lease is up. I would not recommend this method to get a car cheaply. Especially if you aren't familiar with the process and can fall prey to a bad lease deal.

With poor credit, my strong advice is to NOT finance a car. Find a cheap ($4k-$6k) car, even if it has high miles, and drive it for a year or two. Yes you'll pay for some maintenance, but it will be cheaper in the long run than financing a $12k car at 18% that will also need maintenance, just maybe not as much. Find a local repairman that you feel you can trust (not a "big box" shop) and that help you understand what is wrong with the car; not just "you need to replace X". Then do some research online and see what the estimated costs for X are. That's much easier said than done, but it will help. If you feel like you're paying for more than you need, then don't go back.

Answer 2

some old affordable car, say a 2008-2010 Nissan or Hyundai with at least 100k miles mileage"

A Japanese* car of that vintage is not old, and 100K miles is just nicely broken in**. You would do better to look at say 5 years or so either side of 2000. Check out your local Craigslist.

* I have no experience with Korean makes, but don't see why they should be different.

** My 3 vehicles range from 2002 to 1988. All have well over 200K miles, and run well. And just FYI, I could easily pay cash for most (non-exotic - not a Ferrari or Rolls-Royce) new cars.

Answer 3

Buy used, from an individual seller not a dealer, aiming for a $1000-3000 price tag, and pay cash up front. The examples you mentioned in your question:

some old affordable car, say a 2008-2010 Nissan or Hyundai with at least 100k miles mileage.

are perfectly good choices, but you might find a Honda or Toyota better. Nissans tend to be more expensive to maintain due to fancier mechanical systems.

Don't necessarily aim for a vehicle with no problems. Aim for a vehicle you can afford to replace if it ends up having problems you can't deal with. You're better off replacing a $1000-3000 car 2 or 3 times than buying a $10000 car once, and not sigificantly less likely to need to replace the latter, anyway, but most small problems are affordable to fix or are things you can live with, without fixing.

If you can, take someone knowledgable about cars along to check it out with you before you buy. Mainly look for problems that would cost more than the value of the car to repair. In my book, that would be:

• noises from engine or black smoke in exhaust indicating mechanical damage inside
• bulging hoses, signs of coolant leaks or sealant use, or lots of water vapor in exhaust ("white smoke") indicating blown head gasket or similar issue
• transmission problems (slipping, not going into gear reliably, noises, etc.)

If your helper can find problems that are affordable to fix and give a good estimate on cost, try to get the seller to deduct the cost of fix from the sale price.

Answer 4

If you don't know much about cars, find someone who does. The cheapest way to get a car is to look for one that is old, but has been well looked after.

Check the service history. Look all round the car. Are there problems that have been neglected? Check the oil, coolant, brake fluid, and so on.

The car should start first time, and not belch out smoke when it starts.

Answer 5

You aren't being very realistic with your expectations.

Will I be able to finance a <6 year old reliable car for less than 250$ per month with a low (very thin) credit score?

With your lack of credit, you will struggle to finance anything at all, much less a recent vehicle with a low monthly payment. The 18% APR offers you're attracting are predatory. Gap insurance will significantly add to your monthly payment.

Do you think leasing would be a better and more affordable option for a year or two or buying an old car?

No-credit individuals will have to put down a substantial security deposit to lease anything. If you have that, you might as well pay cash for a used car.

Any other suggestions (other than "don't get a car")?

You might be able to cheaply score a used electric vehicle with a dying (not dead) battery. Range will be limited and will be impossibly-expensive to fix when it dies, so treat as disposable and don't spend too much on it upfront.

There is always Uber-- taxiing has never been easier or cheaper.

Having done the no-car, no-credit immigrant hustle myself recently, if you have the budget for a long-term rental of a car, you can moonlight as an Uber/Doordash driver yourself to subsidize some of the expense while you build credit. (In retrospect, this was largely self-defeating and I wish I had just taken Uber everywhere I needed to.)

Answer 6

A different perspective, in addition to the other answers:

If new 'position' means a job in an office or other existing setting (i.e. you are NOT being sent to establish a new location from scratch, or to work an area alone), have you talked to your new colleagues and boss(es), the people already working (and living) there?

They almost certainly have contacts with local bank(s) or credit union(s) to whom they can at least introduce you, and very likely the company can directly confirm your employment, which could help offset a thin credit file. They might be able to arrange loan payments directly from your paycheck, which the lender will view as eliminating the risk that you decide to spend the money on other things or just forget to pay, although there remains always the risk you could be laid off and no longer be able to afford the payments. They might also know of good (or at least somewhat less grasping and dishonest) local dealers and/or private sellers, and almost certainly can either refer you to a competent and affordable mechanic for advice or just advise you themselves.

There might even be the possibility the company owns some vehicle(s) that aren't (all) fully used and could assign (one) to you temporarily. But avoid doing this for longer than necessary, because they will probably have to report it as a fringe benefit and you will owe/pay tax on it.

For the first few days or weeks until you can arrange/settle/complete something along the above lines, ask about any reasonably near 'rent-a-wreck' firms. These used to be pretty common most places I've been (admittedly a small and nonscientific sample), although in recent years I've noticed fewer of them.

Answer 7

1. If you get approved for a 5-year loan at 18% for a used car and want your payments to be $250/month then you can afford a car worth $9,845.07. You can play around with a reverse loan calculator at https://eaglefederal.org/resources/calculators/reverse-loan/
2. There is absolutely no way to reasonably guestimate this for you. This will differ wildly based on gas prices, your age, location, driving habits (lead-foot versus feather toe), car value, credit score, etc...
   • I would conservatively guess this will reach $300 per month if you can avoid major repairs
3. You are extremely unlikely to lease anything at your $250 target price. For a cheap new car and excellent credit score you would be looking at $300 to start. Used cars do not get leased, sorry.
4. Yes, learn to repair the car yourself. I understand that the cost of tools might feel prohibitive but you only have to pay for tools once unless you continuously break them for some reason.
   • A full brake job (rotors and brake pads could easily cost $1,000). The materials alone would probably be $300-$400. You could take that $600 difference, invest in a lot of tools, and get the job done yourself.

Answer 8

I'm new to the US and never owned a car here, and even before coming here I had a car only for a very short period, so I'm totally agnostic about car maintenance and expenses, especially in the US. I'm also not a handy person at all and can't do the simplest diagnosis or repairs myself (I barely know how to fill in the tank of a car!).

OK, so I maintain my own cars, and I drive the simplest car available: manual everything and no computers except for the engine. When I cross the US (which is gigantic), I bring a big Rubbermaid tub full of spares, along with a spare transmission (only weighs 40 pounds, it's a stick), all four hubs, bearings and seals for all that, anything that might fail as a surprise. I don't want to change a transmission in a Walmart parking lot, but I can if I have to. This is all skill and experience. 95% of my maintenance is planned. I see something wearing, so I order the parts and fit them at my leisure, for very low cost. Suffice it to say, I have a solid car at the lowest cost at which that would be possible.

And as for my time, others spend an inordinate amount of time calling their mechanic, logistically arranging to get their car there, retrieving it, settling up the bill, etc. They'll sink 3 hours of their time into a repair I do in an hour.

Anyway, here's the thing. Actual automobile costs are much higher than you'd think. And people tend to be very forgetful when tallying up those costs. AAA makes an earnest effort to calculate those costs for an average driver, and they peg it at $9,561 per year, ignoring COVID related demand costs. About $4000 of that is depreciation (resale value the car loses every year as it ages, which is a number you pay but is hidden from you in a lease). But still, $5,561 is serious business.

Even my economization is no escape: I wild-guesstimate my costs as between $3000-4000 a year, when you consider registration, tolls, tickets, fuel, $1000 insurance which only gets me liability; no point carrying collision or fire/theft on a $500 car, $1000 budget for maintenance (which I don't nearly use), etc.

But when you have an older car, and not skills... that seems to me to be the worst-case scenario. You have to do Preventive Maintenance (PM) at the tempo I do it... but you have to hire it all done and you end up paying more on a monthly basis than a new car would cost. So inevitably, people say "I will neglect that PM" and guess what -- those formerly trivial fixes become an accident or breakdown. And they quickly start perceiving the car as "unreliable" (it's their fault). They don't self-realize: they don't go "ooh, I should have listened to my mechanic and done all that PM", they blame the car and shop for a "more reliable" hahahaha car. Round and round you go.

So there really isn't a viable answer, except for you to budge on either a) your unwillingness to learn to DIY maintenance, or b) your sense of priorities re: spending most of your available funds on moving expenses.

How about just bringing JUST YOU? Most household items are cheaper to buy locally than to even ship. Goodwill and Salvation Army have more furniture than they know what to do with, for pennies on the dollar, and then there's Craigslist. Electric stuff won't even work anyway. Bulky PC case? Heck with that, throw the CPU chip, video card and hard drive in a backpack. We have PC cases and MoBo's here.