How To Get An Auto Loan If You Have Bad Credit

By: Chris Chandler

Are you in need of a new car, but are afraid it's impossible
because of your bad credit? Well, the fact is that, today,
consumers with bad credit have a wide variety of options
available to them in regards to bad credit auto loans. In fact,
it can be very easy to get the money you need, but it is
important for you to do your research before getting a loan.

If you have bad credit, the first thing that I would recommend
is to find out more about your own financial situation. What is
your exact credit score (FICO) with the three credit agencies
(Experian, TransUnion, and Equifax)? One place that you can find
this information is the free credit report service at
www.AnnualCreditReport.com. At this site, you can place an order
for a free yearly credit report. The credit report has
everything but the credit score. You have to pay extra to get
the scores, but it is worth it. It is valuable information to
have on hand in your search for the best auto loan deal. With
this information, you can do quite a few things to help
yourself. The first thing you need to do when you examine your
credit report is to look for errors. Correcting errors can help
bring up your credit score some. Another way to increase credit
score is to have a friend, or relative, with good credit add you
as an authorized user to their credit cards. This connects their
good credit history to yours. If you simply don't know what to
do, there are credit repair companies that can help clean up
your credit report. I have used a credit repair company in the
past and was very pleased with the results.

I definitely don't recommend getting a bad credit car loan from
the local car dealership where you buy your car. You will
definitely get charged a very high interest rate (APR), and will
most likely be fed a load of bull about the bank "requiring you"
to buy extras like the extended warranty, glass VIN etching,
credit life insurance, etc. etc. The list goes on. One trick
that they also do is to say that your credit score is lower than
it is just to justify higher interest rates. You just need to
know that information anyway. If you don't, it can really cost
you in the long run. Let's use an example. Lets say that you're
getting 12% APR (could be higher) bad interest loan from a
dealership instead of a normal 6.25% APR car loan you might find
elsewhere. True, the monthly payment is only about $40 higher
for the bad credit loan per month, but over the life of the loan
(generally 60 months), high interest really adds up. In the end
you pay an extra $2,500!

Keep in mind that bad credit auto loan lenders usually require
that you have steady employment and a favorable debt-to-income
ratio. Of course, if you cannot demonstrate employment, you are
dead in the water anyway. But what the bad credit borrower needs
to understand is the fact that this kind of loan can come at a
high price, and it pays to research several options before
buying.

One of the best places to find a bad credit lender is online.
There are hundreds of them there out there. Shop around. Simply
google "bad credit auto loan" and several will come up. I would
try to go with a well known, established auto loan company.
Check out its background with the Better Business Bureau. Be
sure to read the fine print and know what the exact terms of the
loan are.

Another place to look for automobile financing is your local
bank. Sometimes when it is hard to get a loan anywhere else, you
can get the money you need from this traditional source. If
nothing else, you can get someone else with good credit to
co-sign the loan with you. The co-signer assumes equal
responsibility for the loan, so it is best to have an open line
of communication with the co-signer about your credit situation.
On any loan, also be sure that there is no prepayment penalty in
the fine print so that you can pay it off early or refinance
easily.

When it is all said and done, a person with poor credit does
have many options available. It is just a matter of doing the
research and keeping an eye out for the best deal available.
Your dream car is within reach, and having bad credit shouldn't
hold you back.

About the author:
Chris Chandler is a successful entrepreneur, webmaster, speaker,
and internet marketing consultant. His website, Christian eBuy,
http://www.christianebuy.com"