5 Best Options for Financing a Car with Bad Credit

Get Car Financing
Even with poor credit.

January 27, 2012

Believe it or not, you can finance a car with bad credit, it's just that you have to know where to look for the credit and how to do it. Here's how:

Work with the Business Office and the Factory Finance Arm: This combination gives you unparalleled flexibility in financing a car, because you are working with the people who not only find you the car you want, but will also be financing it. Since you are working with the business office and finance arm, you may be told which car you can buy (the factory wants to have the ability to show enough intrinsic value in the car, so that no one will question the loan) and it may be more car than you thought you could handle. Still, if you can handle the payment, go for it. You may also have to increase your down payment to show you have lots of equity in the vehicle starting off. It helps your creditworthiness.

Use a Bad Credit Financing Service: A new development, they are finance companies that specialize in finding finance for people with poor credit. You may have a record of bankruptcies or repossessions or slow pay or no pay and they will still find you credit. It may be the only way you can get financing, so use it. Be aware, though, the interest rate will be sky high and if you are a little late for your payment, you may find a hole in the lot where your car was parked, as they won't hesitate to pull the vehicle.

Use a Dealership's In-House Payment Department: This concept has been around for a long time and it does let you buy a car. You make the monthly payment directly to the dealership in-house auto loan company as the dealership is fronting you the  money and the car. Be aware though, that like the bad car credit finance service, if you are late with your payments, you may see your car disappear on the back of a flat-bed.

Use a Strong Co-Signer: See if you have a family member of close friend with good credit who will act as the co-signer on your car's note. In this case, you will get the car, but your friend or family member will be stuck with the bill if you default and decide to stop paying. Indeed, if you just decide to let your family member or friend pay and you stop, you could be in for a large dose of trouble, not only from your friend or family, but also from the local authorities, so make sure you pay the bill on time.

Bring your Current Finances Up to Date and Pay Off your Credit Cards: This advice is as old as the hills, but it is still the best advice, because not only does it show you are serious about re-establishing your credit, but it also shows you are taking responsibility for your debts and paying them down. It's the best way to rebuild your credit, so you don't have to face the bad credit blues anymore.

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