Getting a bad credit car loan

Much like the bad credit home loan market, the bad credit car loan market is a packed and competitive arena. If you find yourself in the position of needing a bad credit auto loan use discretion in selecting your lender. Most lenders working in the bad credit car loan sector are straightforward. However there are those who skirt the law with predatory loan practices. Knowledge is the best protection against these shady loan officers. Know more about your own credit than the lenders do. Arm yourself with a current credit report and FICO score. There are free services available online if you look around a little. If a lender says they have different information about your credit than you do, ask them for their sources. Most of the time they will have the same information that you have. But if for some reason they have some crazy thing listed on their copy of your credit report. Something that doesn’t sound like anything you know about. Maybe you should ask to see their copy of your credit report. It is very possible they entered your social security number incorrectly. A simple key stroke error could possibly lead you to having a high interest rate on your car loan. So, make sure the info they have matches up with what you have.

Car dealerships for bad credit car loans
Dealership have all kinds of tricks they play on you to buy

Don’t just show up to a car dealership

Don’t just show up to a car dealership and have a salesperson show you around. If you want to look at the cars on a dealerships lot. Going on a day of the week when they are closed is a great idea. Many states follow a law called “blue-law prohibitions” in which automobiles may not be purchased or traded on a Sunday. So, go to a car dealership and look around at the cars on the lot on a Sunday. When no sales people are around to bug or hassle you. Take your time looking at the different models, colors, prices, and features.  Without some pushy salesperson trying to close a deal so they can get paid their commission. After you have spent a decent amount of time looking at the available cars that are out there. Go home and research the price of that car to make sure dealerships isn’t trying to rip you off.

a person doing research online
Spend some time researching the car you want to buy

Do research on the car you want

Research the value of the different models. For example, you might like a 2 year old Honda Civic 2 door. That has only 24,000 miles on it. It is offered for $14,000.  However, the car next to it is a 3 year old Honda Civic with 2 doors. But it has more wear with 36,000 miles on it. It is offered for $12,500. Why the difference of $1500 in price? The second one has 12,000 more miles on it. At that point you need to ask yourself if all things being kind of equal on these two cars. Which is the better car to buy? The more expensive one has less miles on it. The other one is less expensive, so the monthly car payment will be less. Also, the old car will possibly be less expensive to insure, and register. However, an old car will have maintenance coming up sooner than the new car. These are all things to consider.

person stressed out getting a bad credit car loan
Don’t let sneaky salespeople sneak in fees for nothing!

Make sure the salesperson isn’t increasing the price of the car

The actual price of the car being financed with a bad credit car loan doesn’t change. The interest rate of the loan will change depending on the borrowers FICO score. But the price of the car should be the same. So make sure the dealership doesn’t try and lie to you and tell you some story. After all, if a person left a court house after filing a bankruptcy and stopped into a 99 cents store. Everything would still be 99 cents to them, right? The store wouldn’t say to them “Oh I’m sorry because you just filed bankruptcy recently. So everything here is going to cost you $1.15 alright”? It’s possible to become trapped in a loan and be what is known as being “upside down on a loan”. You pay way more for a car then the car is worth. For example, you buy that $14,000 Honda Civic mentioned above. But the sales person is shady and slides in about $800 in garbage fees on your loan. Then adds another $1000 to the price of your car. Next thing you know your $14,000 Honda Civic is now $15,800! If the car were worth $14,000 and you owe now $15,800 on the loan you’re “upside down” on your car. This isn’t all that uncommon when first buying a car. But if after around a year of payments you’re still upside down on the car. You got ripped off by your salesperson. A way to make sure you’re not getting screwed over or ripped off by the lenders is to shop around.

Lenders in competition for your bad credit car loan
Lenders battling for your car loan

Shop around for your car lender

Just as you shop around for your car, shop for your lender. But who has time to driver over to multiple banks or lender. Fill out their application. Wait around for them to run your credit. Then tell you “I’m sorry but we don’t lend to a credit score as low as yours. Perhaps you can find another lender. One that will help you with your bad credit car loan”. You then walk out feeling like a total loser, and go home sad and upset. That sounds like a pretty horrible process. A much simpler way to apply to multiple lenders all at once is applying online at when you fill out their quick online application all your information is securely sent into the network of lenders they work with. That way your credit is pulled just one time. However all the lenders will be able to see what your situation is. Some of the lenders in the network only work with the best borrowers. Those borrowers are  known as “prime rate borrowers”. Those are the people with high FICO scores. The funny thing is those lenders don’t really make a lot of money on those loans. The reason being is the interest rates are so low. Because the borrowers are very low risk borrowers. While other lenders concentrate on borrowers with bad credit scores. The reason they do is bad credit score borrowers don’t have as many lenders willing to lend to them. Because of the risk they won’t pay back their loan. These borrowers will pay a higher interest rate for their bad credit car loan. However, one nice part about when you apply with is the competition among lenders. The lenders in that network are aware they are not the only bad credit lender seeing these borrowers. This means they can’t offer a borrower insanely high interest rate. If they do the borrower will turn them down and go with another lender. A lenders that likely offered a lower interest rate then them and got the loan. Having competition among lenders only helps keep interest rates lower for borrowers. Which in turn keeps borrowers car payment lower so they can live a nice life. If you want the network of lenders that works with working for you all you need to do is apply HERE. Then wait for the lenders to call you. No longer having to drive around applying to every lender near you. Doesn’t that sound like a MUCH better idea?