How to Find and Get an Auto Loan If You Have Bad Credit

If you have a credit score of less than 620 you will likely be classified as a subprime borrower. What is a subprime borrower? To put it simply, a subprime barrower is someone who lenders believe will pose a higher risk than a barrower with a higher credit score.

Don’t however give up on finding a car loan if you have bad credit. There are lenders who specialize in making bad credit auto loans. These lender’s typically charge higher interest rates than those who lend to prime barrowers to offset the higher risk they perceive they are taking when making you a loan.

FInding an Auto Loan Where To Start

• A car dealership that specializes in bad credit car loans - not all car dealers have the ability to deal with people who have poor credit.  If you get turned down by one car dealership for a car loan do not dispare there are many car dealers who will lend to people who have bad credit and they will try very hard to find you a car loan.  They are in a good position because those that do handle bad credit car loans and understand the bad credit auto loan industry very well and are very educated in this area.

• Online car loan is another great source of finding a auto loan.  Car Credit Facts offers car loans and we have a great affliate with numerous car dealerships and lenders available to help you get the car loan you need.  There are online sources that have a great network of of car dealers and lenders who handle bad credit auto loans online.  It is usually a quick and easy process.  If you have been turned down or want to find another dealer and online source that has a large network is a good way to get another quote.  You can get a quote for a bad credit car loan that we have an affiliate agreement with.  If you do use us please take the time to fill out a review at car credit facts reviews so we know how we are doing.  We want to hear from you and how your experience was.  Car Credit Facts Reviews we want to know how your experience was in getting your car loan so stop by the site above and let us know.
  

• The next place to look is at your bank or credit union for an auto loan.  Not all banks or credit unions deal with bad credit auto loans so if you been turned down by your bank do not despare they may just not deal with anyone who has a FICO score that puts them in the bad credit category.

You want to look at the interest rate and monthly payments consider the length of the loan. If you stretch the loan out over a longer period of time you will end up paying a lot more in interest than you will on a shorter loan. Ask about prepayment penalties. If you improve your credit score you will want the flexibility to refinance the loan and don’t want to have to pay a penalty to take advantage of a lower interest rate. Or if you sell the car or otherwise pay off the loan early you don’t want to get hit with a prepayment penalty.

Bad Credit Car Loan And Your FICO Score

 Before you begin shopping for a car loan obtain your credit report from all three credit bureaus, TransUnion, Experian and Equifax. You can do this online through the credit bureau websites or you can obtain your report with your FICO score.  You need your FICO score so you know where you are at.  There are different levels of subprime and if you are at 620 or a bit lower you might want to make a few changes to get your FICO score up.  This could save you a lot of money in interest rates.  FInd out more about turning your FICO score credit around.  

FICO Score Errors

Make sure these credit reports are accurate. Sometimes there is information in your credit history that is inaccurate. If you find an error contact the credit bureau in writing clearly identifying the error and asking that error be corrected. You may have to provide documentation of the change. Keep copies of your correspondence and be persistent following up with the bureau until the error is corrected.

Bad Credit Auto Loan Downpayment

Determine how much you can put up as a down payment toward the car. If you can afford a 20% down payment you are in a much better position to negotiate favorable loan terms and interest rates. Consider a less expensive car if that is what it takes to be able to put down 20%. A less expensive car will also lower your monthly payments.

Once you know your credit score, have reviewed your credit history to make sure it is accurate and have put aside a reasonable down payment you are in a position to start shopping around for a loan.

You want to look at the interest rate and monthly payments consider the length of the loan. If you stretch the loan out over a longer period of time you will end up paying a lot more in interest than you will on a shorter loan. Ask about prepayment penalties. If you improve your credit score you will want the flexibility to refinance the loan and don’t want to have to pay a penalty to take advantage of a lower interest rate. Or if you sell the car or otherwise pay off the loan early you don’t want to get hit with a prepayment penalty.

Auto Loan Payment Automatic Withdrawls

One last tip ask about establishing automatic withdrawals from your checking account for the monthly payments. Many lenders will offer you a lower interest rate if you have the payments automatically deducted from your checking account.