Obtaining a car loan with bad credit is within your capabilities. However, to find the best rate, a little work is required. There are many ways to secure auto loan financing. If you have bad credit, the odds of getting a super low rate are unlikely. Yet, various lenders offer comparable rates. Here are a few tips on finding a decent auto loan rate with bad credit. Deciding When to Finance a New or Used Car If you have bad credit, you have likely considered the advantages and disadvantages of financing a new or used car. With bad credit, car loan rates may climb past 20%. Rates of this nature equal higher monthly payments. Because vehicles are practically a necessity, some car buyers may be willing to pay higher car payments. However, if higher rates interfere with your ability to afford a vehicle, it may be wise to postpone financing a car. After a bankruptcy or repossession, many auto loan lenders recommend waiting approximately 24 months before applying for car financing. This allows ample time for persons to improve their credit rating, and the chances of getting a reasonable rate. Get Approved with a Subprime Lender Subprime auto loan lenders offer a wide range of auto financing options. Because subprime lenders are able to locate loans for individuals who do not qualify for prime rates, most bad credit applicants will qualify. However, to get an auto loan, your credit score cannot fall below 500. Bad credit applicants can find a subprime or high risk auto lender by using a loan broker. Brokers have close dealings with many prime and subprime lenders. After reviewing your credit history, loan brokers match borrowers with potential auto loan lenders. On average, brokers are able to find three to four reputable lenders. Each lender remits a quote, and the broker forwards the quote to the car buyer. Auto loan quotes include all the important details such as estimated loan terms, monthly payments, interest rate, etc. Quotes are no-obligation. Thus, car buyers may choose to accept or refuse a lender's offer. |
