A bad credit auto loan is not impossible to find, it just takes a little work! If your credit is a little dented and dented, you don’t have to exclude it from a car loan. There are those companies that will overlook bad credit. Auto loan options for you if you have less than perfect credit include dealer financing on the lot, getting a co-signer, attempting to repair your credit before pursuing a bad credit auto loan, and accepting less than ideal terms for a loan. bad credit auto loan loan.
Your best starting point, before you even start looking for a car, is to check your credit report yourself. A new law passed last year gives you the right to get one free credit report from each of the major credit reporting agencies every 12 months. The law is being rolled out across the country in stages, but by the end of 2005, no matter what state you live in, you’ll have the right to check your own credit history for free once a year to find out if you have bad credit. Auto loan and finance companies will use information from your credit history to determine whether or not to give you a loan and on what terms, so it makes sense to check first and avoid being caught off guard.
If you find errors on your credit report, or if a credit reporting agency erroneously reports that you have bad credit, postpone applying for an auto loan until you have a chance to clear up the error. If, on the other hand, your credit report legitimately lists problems, you can start looking for a bad credit auto loan through one of several different sources.
Because a bad credit auto loan carries more risk for the lender, it’s hard to find one with “competitive” interest rates. The best way to get a good interest rate and start repairing your bad credit is with a co-signed auto loan. By co-signing a car loan for you, your cosigner assumes responsibility for paying your loan if you default. The interest rate is likely to be much better than what you can get on any other bad credit auto loan, very close to the terms that your co-signer would be offered. Just be sure to ask the lender to report payment history for both you and your co-signer so you can start repairing or building your credit history.
If a cosigner isn’t possible, or if you prefer a loan in your own name, try to get a bad credit auto loan on your own before going to the dealer. Your regular bank is your first logical choice. Make an appointment to speak with a loan officer at the bank where you normally do business, as they are interested in continuing and extending their relationship with you. One possible option through a credit union, for example, is to arrange for a bad credit car loan that is tied to one of your other accounts as collateral.
The car dealer should be your last option to get a bad credit car loan. They have a vested interest in getting you a car, but keep in mind that you’ll pay high prices to finance a bad credit auto loan through a dealer. However, if it’s your only option, you may be able to convert your high-interest car loan in the future if you can repair and improve your credit score.