How to get a Car Loan with Bad Credit.

Even for consumers with Bad Credit, it is still realistic to obtain a Car Loan for either Lease or Purchase.  The key in planning the financing process is to know your ropes and shop around.

Banks and Credit Unions usually offer better rates and terms for loans. Even though banks have tougher criteria and require a higher credit score, it is still worth a try. Make sure to speak with a Loan officer at your branch and she might do some magic.  Credit Unions might be a better option than banks since they are community-oriented, often provide more personal service and offer even better interest rates.

If your credit is too low and you are still short of meeting the banks’ requirements, another option is to find a “Buy here-Pay here” dealership. To fill their quotas, they often will work with customers within a lower credit range.  They might ask for a co-signor, massive downpayment and higher interest rates but some people still find that option attractive since they couldn’t get approval anywhere else.

If you don’t like the idea of buying from a dealer, don’t want to be pressured or be limited to their choice of cars, you might want to contact a Sub-Prime lending institution or a Second Chance Car Loan lender. These companies will get your covered if you have a Bad Credit or No Credit, new to the country, have experienced bankruptcy, judgment, proposal or collections. They base their decision on your current financial situation rather than past troubles or mistakes. Of course, you should expect higher interest rates or a larger downpayment, sometimes up to 20%, but that might be your only option.  Still, by going that route, you can actually re-establish your credit by making regular payments. Once your credit is at a healthier state, you can apply for refinancing your loan at better rates.

Nowadays, many of these companies will offer you application online. You might find it convenient since you apply to an agency of your choice, get all your rates online and are not pressured into any decision. Additionally, online approvals are processed fairly quickly, sometimes within hours. Applications are usually free of charge, once you fill up your application, you find out your rates, and then make the decision.

Once you are approved for a loan, you have the freedom to shop for a car at a number of dealerships of your choice.