How to Get a Car Loan with Bad Credit


Buying a new car involves getting it financed as most people do not have the full amount to pay to the auto dealer. There are many banks and other financial institutions vying with each other to lend money to car buyers. Even auto dealers are seen making arrangements through lenders to make it easier for car buyers.

However, most lenders demand a credit report from those applying for a car loan as they want to make it sure that they will get their money back along with interest. It can be troublesome for you to get the nod from the bank if you have a bad credit history. However, there are still some easy ways to get car loans with bad credit.

The first step before approaching a lender for a car loan when you suffer from bad credit is to get your latest credit report. This is important as many people apply for a loan thinking they deserve to pay a higher rate of interest as they have a poor credit history. Arrange for an easy to understand overview of your credit report that is freely available from You are able to make sense of your credit score with the help of this overview and understand the factors that make it difficult to get a car loan.  Car loans bad credit becomes easier if you spot a mistake in the credit report and get it rectified to have a better score. Shop for a car loan with confidence after analyzing your credit report.

Do not submit your credit report to each and every car loan lender. This is because every time your loan application is rejected by a lender, your credit score drops by 5 points. If you are serious about getting a car loan with bad credit, talk to the loan officer at the bank and tell him your credit score rather than submitting it formally. Avoid damage to your credit score with rejections to improve your chances of securing an auto loan.

There is no need to jump and say yes to the first lender that approves your car loan. Auto loan bad credit rates are generally much higher than the interest rates charged from applicants who have a good credit score. You can lower the interest rate if you opt for a short term for the auto loan as banks charge higher rate of interest for loans of longer durations. Another way to reduce rates is to go for a newer vehicle as banks charge higher rates of interest for financing older vehicles.

Do not fall into the trap set by auto dealers when they say they will arrange cars for bad credit. They get a good commission to steer customers to lenders that charge high rates of interest. You can get a bad credit car loan on easier terms, if you approach the lenders directly.