How to Get a Bad Credit Used Car Loan

January 26, 2012

You will need to take the time to do some research so that you can find the best available used car loan rates for those with bad credit.

Tips on Getting a Bad Credit Used Car Loan

Before you get a bad credit used car loan it is critical to understand how credit reports and car loans work.

Obtain your credit score form Experian, Equifax and Trans Union. They will provide you with one free credit report every year. To get your fee credit report visit AnnualCreditReport.com. It is advised to only obtain one copy each year from each of these reporting agencies. Believe it or not, checking your credit too often can lower your credit score.

Never take the first offer. There are unscrupulous subprime lenders who will take advantage of the fact that you have bad credit. Some will even quote you a lower credit score than you actually have, so that is why it is imperative to obtain your credit score before you begin dealing with bad credit used car loans.

Be prepared to pay a higher interest rate than someone that has a good credit rating. A credit score below 680 is considered poor and in fact, current lending standards have tightened so much that it is very difficult to for you to obtain financing with a credit rating below 650, even if you are willing to pay a higher interest rate.

If you are considered a high risk due to your credit rating, your used car loan rate will be substantially higher. Therefore, you might want to take a few extra months to build your credit score, pay down some bills, and raise a down payment of at least 20 percent.

If you are in need of a used car, you should consider getting a co-signer. If the co-signer has a higher credit score than you, that may lower your used car loan rate.

Obtain the loan prior to shopping for a used car. This will give you more buying and bargaining power.

Reputable online sources include: InstantCarLoan.com, AutoCreditFinders.com and even right here at CarsDirect.com. We can link you to hundreds of lenders, which will give you the opportunity to compare bad credit used car loan rates.

Each bad credit used car loan finance company has different standards. It is the consumer's responsibility to ask a lot of questions and research each lender. Remember that just because you have bad credit, does not mean that you cannot get a bad credit used car loan.