If you have bad credit, you may already know the trials of trying to obtain financing. While you may not be able to get a department store credit card, you can get yourself into a new or used vehicle. Yes, even with poor credit, options are still available.
Your local bank may have posters that advertise their auto rates that you can browse over while you wait in line. Some of those offers may seem quite appealing, but if you have bad credit, there is a nagging feeling of doubt. Those numbers are not just for everyone.
Plenty of banks offer both new and used car loans, but not all are able to offer auto loans for people with bad credit. This isn't necessarily because of the state of the economy today. That is to say that the same bank, when the economy was flourishing, still may not have been able to accommodate someone with mediocre credit. It's just more difficult to get a loan from a bank. Why? Inspections, leans, and a multitude of things that a car dealership would have taken care of are now your responsibility for prequalification. It can be difficult, when trying to purchase from a private party, to get the seller to cooperate with your attempts at securing financing from a bank.
Dealerships usually offer their brand's financing first and foremost. The zero down, zero percent interest commercials that are aired on the radio and television reflect what someone with an amazing credit rating can obtain through the franchises' lender. Dealers will also have a medley of other banks that they are able obtain financing through, but their car loans are aimed at people with average credit. If you have bad credit, then you should expect to be asked if you have a cosigner available and probably a four figure down payment.
If you do not have a cosigner available, a visit to another dealership that has sub prime banks associated with it may be the best option for getting a vehicle in your name alone.
There are a few dealers who offer a sub prime finance department, sometimes referred to as the special finance department. This division of a dealership is usually separate from their regular financing department, and will be more associated with a dealerships used car inventory. The banks that these dealers have on hand will offer bad credit auto loans for smaller amounts and extend credit to people with blemished credit. There are a multitude of services online that can assist you in locating and applying for loans specifically with dealers that have sub prime departments.
The interest rate you will be paying with a bank that caters to people with sub prime credit will be much higher than one without. On the same token, the interest rate that you may be comparing it to is one that you wouldn't have qualified for anyway. It certainly will not be the highest comparison either.
When all else fails, even with the most abysmal credit rating, dealerships that offer what's called buy here pay here are able to finance just about anyone that walks through their door. This means that the dealership will be offering the financing themselves, and not asking for assistance from a third party. The qualifications will be less strict and some minimum requirements may be open for negotiation. These dealers thrive from offering bad credit car loans. Of course there are some drawbacks. The interest rate will be very high, and repossessions can start as soon as a single payment is missed. Some buy here pay here dealers will go as far as having an ignition cut off installed in their vehicles, and you can bet that cost is added into the price of the vehicle.
Now that you know that financing is available for you when you decide to put yourself on the road, there are other things to think about. Do as much research as you can about the dealer, vehicle, insurance, and financing that you have chosen. Remember that the first choice is not always the best. A bright red sports car may be how you envision yourself on the road, but may not be the practical choice for your needs. Reasonably look at your current finances, determine what you can afford now, not what you hope to be able to afford later. Your life can change dramatically over the term of a loan, by not over extending yourself now, you may help yourself along the road in the future.