How Can I Get a Car Loan With Bad Credit?

Having bad credit may make large purchases seem impossible to make. Medical bills and other unforeseen events have left many people with blemishes on their credit report. If you are in need of a car, and have bad or less than perfect credit, there are a few things you can do to get into that new automobile.

Know Your Credit Report

It may seem like a step you could skip, but you want to know what is on your credit report. Many credit reports have incorrect information on them. You want to be able to explain any imperfections to your potential lenders, or even have incorrect items removed before applying for the loan.

Call Around

Many dealers have special lenders that are willing to loan money for a car to those who have had serious credit problems. Call around to local dealers, new and used, and ask them what kind of special financing they have available.

Buy Here Pay Here

Many small used-car dealerships may offer a program called Buy Here Pay Here. They may require a large amount down, normally close to one-half the total cost of the car, but they do not pull credit reports if you can prove income. You will then make weekly, biweekly or monthly payments straight to the dealer.

Cosigner

One of the best ways to obtain a vehicle with bad credit is to have someone who has good credit to go on the loan with you as a cosigner. A cosigner can significantly lower your interest rates, your payments and increase your chances of having the loan approved through a traditional lender.

Private Party

If you know someone who has a car for sale, or see one in someone's driveway with a for-sale sign, you can always ask if you can make payments on the car. If you can come to an agreement to pay for the car over time, before taking delivery of the vehicle, a private seller may be more willing to work with someone than a large bank.

Preparation

Have proof of income and proof of how you are able to pay for the car ready for any of the above situations. If possible, try to pay off some of the smaller debts that are bringing down your credit score. Doing this over the course of a few months can significantly increase you chances for approval.