How to Get Approved for a Bad Credit Car Loan

Getting an auto loan with bad credit is more difficult than getting one with good credit, but it is not impossible. Your credit score is only one of many factors that are considered when a lender is considering the risk factor involved with granting you loan approval. Propping up the other factors enough can usually override the bad credit score. Here is what you can do to secure an auto loan if you have a low credit score.

Instructions

1. Choose a car that presents a good value. Getting an auto loan is easier than getting some other types of loans because the car can be re-possessed and sold to cover a loan that is in default. Find a car that is priced at or below what it is actually worth, and you will have a better chance of being approved for a loan to purchase the car.

2. Pull together some money for a down-payment. This may take some time and sacrifice, but remember, you are compensating for a bad credit score. If you are able to come up with even $1000 for a down payment, the lending agency will see you as less of a risk. You will have proved that you can be responsible with your money (enough to save it) and you will lower the amount of the loan that you are seeking. If the value of the car is more than the amount of the loan, you are in good shape. This helps tip the scales in your favor.

3. If you don't have time to save for a down payment or to shop around, you can try qualifying for an auto loan at corner lots and smaller dealerships. Many of these dealerships offer "in-house" financing which means there is no "lender" who has pre-determined qualification requirements for you to meet. These dealerships have standards to, no doubt, but they are more guidelines that rules. If you can convince the owner/manager that you will make your payments on time, you're golden. Also, these dealers sometimes want to make a sale bad enough that they'll take on the extra risk. The only downside to this is you'll often end up paying way too much for a questionable, "as is," very used car. If you have no money and it's the only place you can get approved, what choice do you have? None. And they know that too - hence the higher price.