How to Get a Car Loan with Bad Credit

A bad credit rating is a stigma that discourages millions of people from seeking to buy a vehicle they need. Too many make do with a car, truck, or SUV that’s on its last legs, spending for repairs when there are ways to finance a car loan even with credit problems.

Auto Dealerships Really Are Motivated to Sell

It’s almost impossible to switch on the TV or radio these days without hearing a commercial about an auto dealership that offers “car loans to good people.” It’s not a message you may not want to hear if you’re used to getting turned down for car loans with bad credit. That’s too bad because the issue really isn’t whether you can get a car loan, but whether you can get one with a decent interest rate.
The best way to get the ball rolling is to research loan options until you find one that meets your needs despite your credit history. There are several easy steps you can follow which won’t take too much time or cost a lot of money.

Getting the Ball Rolling

Of course, checking your credit score is the best place to start. The FICO credit scoring standard gives you a good idea of your options and where you should concentrate your efforts. A review of your credit report will identify specific problems, like a late payment history or frequently exceeding your credit limits, which are problems you can overcome.
Remember that the more debt you have, the more it affects your credit score so avoid opening any new credit cards or taking out a new loan if you’re planning to shop for a new vehicle. It’s one way to begin “triaging” your credit rating and improving your chances of getting a car loan that’ll work for you.

Understand What You Can Afford

It’s crucial to know what you can afford before you start searching in earnest for a loan. There are lots of people out there who regret having overreached themselves by financing a car purchase with a loan that’s too much for them to handle. Go into it knowing exactly what you can afford and proceed accordingly.
Researching APRs can give you a good idea of the best places to go for a loan, so do some research and have a game plan ahead of time. It’s also a good way to avoid unpleasant surprises. Not every car seller is pure and virtuous, so be wary of finance-here, buy-here places that will talk you into a high interest rate just to sell you a car.

The Benefits of a Down Payment

Going in with a healthy down payment is one of the best ways to keep costs down and secure a manageable car loan. Remember, you’re more likely to get good loan terms if you can keep your loan-to-value ratio down, so make every effort to pay as much as you can up front. You might be surprised at what you can afford with a healthy down payment.

Preparation Is Key

The last thing you want is to walk into a dealership not knowing what you can afford, what your credit/financial position is, and without some kind of down payment. Do plenty of research, work to improve your credit score, and prepare financially ahead of time so that you’ll be in a better position to secure the deal you want.