How To Get Auto Financing For Bad Credit

By Mitch Reynolds · Leave a Comment

When applying for auto financing for bad credit there are a few things that you can do that will help your chances to 1) get the auto loan, and 2) get a better rate on the loan. These are simple steps that you can start to do on your own, and require just a little bit of self-discipline and homework, but they can help you out tremendously when looking for auto loan financing for bad credit.

First, you need to know what you are getting yourself into. Before you purchase your car, you need to make certain you know a few things, otherwise you stand a very good risk of being taken getting auto finance for bad credit on your car. You must (this is an absolute) know your exact credit score from the three different credit bureaus. The three bureaus are: Experian, Equifax, and TransUnion. It is important to know all three because all three will be different, and one of them (or all them) may have bad information on file that you can clear up before you apply for automobile financing for bad credit. Having your credit score will help you do two things – 1) You can clean up any errors because now you know about them, and 2) You will not be suckered into believing that your credit score is worse than it actually is. This is a common tactic employed against people looking for auto financing for bad credit, but it is also a very easy ploy to protect yourself against. Just keep your complete credit report with you in a file. That way, if they try to pull this tactic on you then you can back yourself up and perhaps even use this ‘mistake’ on their part to get you a better rate on the loan.

Second, make sure you know what the current rates are in the market for auto financing bad credit loans. Knowing what the rates are again will keep you from getting scammed and give you an advantage during the negotiations. Remember, every tiny fraction of a percentage point counts, so don’t get caught up thinking only in terms of what your monthly payment is going to be. Remember to look at the total cost of the loan and the length of the loan—a lower monthly payment isn’t going to help you out much if you have to pay for the car over an extra 3 years.

Finally, skip out on all the extras and add-ons when you are looking for a bad credit auto loan. Yes, it sure would nice to have that Bose stereo upgrade, or the leather seats, or the undercarriage coating added, but when you are paying up to 23% on the total purchase price, that extra couple thousand dollars will add up extra fast. It’s much better to just stick with what you absolutely need at this point in your financial situation, then when you have fixed your debt problems and raised your credit score you can add on the extras.

Again, remember it’s not just about the monthly bill but the entire cost of the loan, and following these three tips will help you get a better auto financing bad credit rate and potentially save you thousands of dollars over the life of your loan.