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By Curt Bush
There is nothing worse than needing to make a purchase which requires credit when you have bad credit. One of the most common situations where this can come up is with the purchase of a car. Since most people require a car to get to and from their work, it’s essential for them to have a car no matter what their credit rating may be. Here are a few options that people who have a poor credit history can do to get an auto loan and save money in the process of doing so.
Dealer Bad Credit Loans
One of the most convenient ways to get a bad credit auto loan is to get one through the car dealership. Many car dealerships offer a wide variety of financing for their cars, including options for drivers that may have less than stellar credit records. The terms and interest rates for these auto loans will vary from dealership to dealership, so it can be difficult to know how good of a deal you are getting on the loan unless you visit a variety of different dealers. While this may be the most convenient way to secure financing, this may not always be the best way to save money on the financing.
Preapproved Auto Financing
A good way to find the best car financing is to get a loan preapproved before even looking for cars, but this can be difficult depending on how bad your credit is. Since there is a high degree of risk to the banks and other lenders for people who have poor credit, many traditional loan outlets won’t preapprove car loans for those with terrible credit. If, however, you have been with the same bank for a long period (especially if it happens to be with a credit union) and have accounts which are in good standing, it’s worth a try to see if you can get a preapproved loan. If it’s possible, this will likely be the best type of financing that will save you the most amount of money.
In addition to the above options, a search for an online car loan can be well worthwhile. With the large number of people with bad credit looking for car loans, this segment of online loans has become quite competitive. By taking the time to see what type of online car loans are available for you, you will get a good indication of what good and poor interest rates are for your specific credit score. This can also allow you to look at the other car loan options and compare to see if they are better or worse than what you can get online.
If you know of someone who has better credit than you and they are willing to cosign your auto loan, you may be able to get a much better deal than if you have to get a loan with your bad credit. The important thing to remember is that if you take this course of action and you default on the loan, the person that cosigns will be responsible to pay off whatever is remaining on the loan. This can cause a lot of problems and is something that you should seriously consider before asking someone to help you out in this way.
Guaranteed Auto Loans
Some car dealerships may offer guaranteed auto loans. These are a bit different than the dealer bad credit loans mentioned earlier. These loans are usually financed by the dealership itself which gives them more options to help you out, but also means they are taking on all the risk so this financing can be a bit more expensive than other options, but can be worth checking out as it might be the only option depending on your credit score.
Whatever you decide, it pays to take some time to look into all the different options available to you. Each person’s credit history and circumstances is different which may make the most appropriate loan different than the next person. By taking the time to investigate all your options, you should quickly determine which type of auto financing will save the most money and be the best for your individual circumstances.