How to Get a Bad Credit Car Loan

The wrong car loan can have you paying thousands of extra dollars in interest. While it may appear that most low interest rates are for people with a solid credit history, you can still get a bad credit car loan with a favorable rate if you know where to look.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

• Recommendation from your bank
• Pay stubs or proof of employment

1. Check out your credit history to see exactly why you have bad credit. Some things on your credit report can be explained to lenders so that they don't immediately reject you. Look at your credit report from all three reporting bureaus: Experian, Equifax and TransUnion.

2. Gather the materials that will help counteract your bad credit rating. These items can include paychecks and other proof of employment. Your bank may be able to write you a letter of recommendation if you have an excellent banking history.

3. Visit several credit agencies and banks in your area to ask about bad credit car loans. Be honest about your credit rating and explain why it is bad.

4. Ask about the repayment choices for bad credit car loans. Some lenders will try to get you to take out a loan with a higher than normal interest rate. Go over your budget before you accept a loan to make sure that you aren't putting yourself in a situation that you can't afford.

5. Make an extra effort to repay a bad credit car loan on time every month. If you handle this loan well, then you will start to build up better credit.

Tips & Warnings

• If you are disputing any claims on your credit score, wait until they are done before applying for a loan. Often, banks will reject you just because you have items in dispute on your credit report.
• You may have to choose your car after you get a bad credit car loan. Don't worry, because finding a car is easier than finding a loan.
• Don't add a car warranty or insurance onto your car loan because it will only make repayment take longer. You can get a warranty after you buy the car and save on fees.
• Avoid loans from dealers that are "Subject to Financing." Often, dealers will try to sneak in different loan terms and higher rates because they think that you won't re-read the contract when you sign it the second time.

[durang77]

on 5/6/2009 great tips