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Bad Credit Auto Loan

You need a car, but you know that your credit rating is less than perfect.  However, it is not the end of the road on your vehicle dreams.  You can qualify for a bad credit auto loan and be able to yourself back on the road.

Before you get started, it is important to know a few things about credit and how it applies to you and your bad credit auto loan.  While each lender determines what a “good” credit score is, generally anything below 620 puts you in difficulty to getting a standard loan.  However, there are plenty of lenders out there who are willing to loan money out, albeit at much higher interest rates.

If you need a bad credit auto loan, it is helpful to have some information going in.  This starts with checking your credit report.  You will want to ensure that everything is accurate, and if not, it should be addressed right away.  You should also find out what your credit score is – knowing exactly how good or bad it is can give you a reasonable expectation of the type of loan you can qualify for.

You should never expect to get the best loan rate on a car from the dealer.  Even if you can get a bad credit auto loan through them, they are going to get a cut of any financing deals they assist with.  Contacting lenders on your own may mean getting yourself a better deal.  Also, take the time to shop around at several lenders.  The first offer you receive may not always be the best.  Besides the amount of the loan, look at repayment terms, interest rates, and all of the fine print.

Your credit score is constantly changing, so by waiting a few months it may go up or down depending on how you are doing with your credit.  You may find it better to wait a few months and improve your score before you go shopping if your credit is only borderline bad.  That way, instead of needing a bad credit auto loan, you may qualify for a standard one.

Some tips for getting a bad credit auto loan include: waiting 6 months before applying after graduating college or moving to a new home, paying off credit card balances as much as possible, have steady employment, wait 3 years after a bankruptcy to apply, and not having a high debt load.  Working towards these and other points on your credit report can improve your score.

If you cannot wait before buying a new car, go ahead and take the bad credit auto loan.  By making on-time, full monthly payments you can use this debt as a way to help improve your score.  Once you have done this for several months, you can look at refinancing at a better rate and payment as your score improves.  Keep in mind, however, not to get into further debt than you can handle.  Failure to keep up with the requirements of a bad credit auto loan will only affect your credit rating negatively.  This may put you in further financial trouble than you were already in.


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