Bad Credit Does Not Necessarily Mean No Car Loan
If you have bad credit and need a car loan, you will eventually find a lender. In fact, nowadays so many people have taken hits on their credit histories, lenders would be missing a large market if they did not make car loans to those with bad credit. Understand that you will be probably be paying higher than the standard interest rates because of your poor credit history.
Friendly Dealers Can Help with a Car Loan for Those with Bad Credit
Unless you have discovered a car dealer who offers car loans for those with bad credit at reasonable rates and does not twist arms, your best bet would be to get pre-approved for a car loan. Friends, family members or colleagues may know of a friendly dealer who cares about customers and offers a good selection of quality used cars. If that is not the case, start searching online for a car loan for those with poor credit.
Pre-Approval Prevents Getting Trapped
If you go car shopping with nothing but a small down payment and a bad credit report, you are setting yourself up to be trapped, especially by unscrupulous dealers. If you have found a car you like and then ask the dealer about a car loan for those with bad credit, you have put yourself and your finances into the hands of the dealer. The dealer may tell you the price for the car is higher for those with poor credit.
Doing You a Favor
Since you have already picked a car you like, the dealer can get away with telling you he or she is doing you a favor by financing your car since you have poor credit. Interest rates are probably going to be high enough to make a loan shark blush. Walking onto a car lot with a blank check helps put you in the driving seat when it comes to the usual negotiations. Always keep in mind that you are doing the dealer a favor by bringing him or her your business.
Improving Your Credit History and Gathering Documentation
One good point about getting a car loan for those with bad credit, is that it offers you a chance to improve your credit scores. If you make your payments on time and successfully see the car loan to maturity, you will have boosted your credit history. Gather your documentation. You will need some government identification (military identification, driving license, etc.), proof of a job and salary (pay stubs or direct deposit statements), proof of residency (utility bill or cell bill) and proof of a direct deposit checking account (bank statements).
Traditional lenders such as banks and credit unions are going to be a tough source for a car loan for those with bad credit. They have tightened their lending qualifications significantly since the great recession. Many private lenders have stepped in to fill the lending gap and have set up shop online. The nice thing about shopping on the Web is that when you punch your browser with bad-credit car loan, you will be rewarded with many lenders willing to finance your vehicle. You will be able to pick four or five dealers with the best interest rates and most comfortable repayment terms. Start negotiating with each until you settle on one who is going to fill your needs in the best possible way.
Going to the Car Lot
Once you know how much you can spend on a car loan for those with bad credit, then it is time to visit a car lot. Be sure your car comes with a warranty and a current safety inspection. Once you have made a down payment on the car you want, you will be able to return within 24 hours to write a check and drive away happy.