How to Get A Car Loan With Bad Credit
It is not impossible to get an auto loan with poor or bad credit; however, you may not get a low interest car loan if your credit score is too low. With that being said, there are many bad credit loan lenders who specialize in financing cars for people who may not have been able to obtain a loan otherwise. Following are some of the things you may consider when trying to get a car loan with bad credit.
Many people who go out looking for a car wind up getting discouraged within the first couple of hours of shopping. This is because they tend to aim too high for their circumstances. If you already know that your credit is not good, you should not go out looking for a dream loan with 0% interest and zero down. It just isnít going to happen so it is better to shop with more realistic expectations in mind. This is not to say that you cannot secure a decent used car loan, it just means that you will ultimately pay a higher monthly payment than someone with A1 credit would. Another thing you will want to keep in mind is the amount of money you are asking for. Most banks are not going to lend an exorbitant amount of money to someone with poor credit.
Your Job Is Your Credit
There are a number of used car dealerships that will hold financing on a car for someone with bad credit. Typically, these car dealerships do not even pull a credit report on their customers. What they are most concerned with is your ability to pay for the car. They will ask for proof of employment, as well as income. Many times they will also ask for a list of personal references. The downside of getting this type of financing is that the car loan rates are usually quite high. You may wind up paying in excess of $110 a week for a car. If this is the only option you are left with then it may be something to consider.
Ask Someone to Co-Sign
Perhaps the best method of obtaining car finance with bad credit is to ask a relative or friend who has good credit to co-sign on a loan. Sometimes this is easier said than done but it is definitely worth a try. Many people are leery of putting their name on someone elseís loan because they fear the person will default, leaving them responsible. However, if you have a friend or family member who trusts you and you are able to get them to co-sign, you will have many more loan options available to you. The only downside to this method of obtaining a car loan is that you will have someone else on the car title with you. Most lenders will not allow you to purchase a car with a co-signer unless they are considered co-owners.
Whichever method of financing you end up using, it is important to look at the big picture. A car loan is a big responsibility and defaulting on a car loan is serious. Be sure you have a good plan and budget set up in terms of making sure you always pay your car payment on time. This is especially important if the dealership reports to the three credit bureaus because keeping in good standing on your loan, may help increase your credit score.