How to Finance a Car With Bad Credit

June 1, 2016

Get a copy of your credit report so that you know what you are going to need to handle. It’s best to be prepared. There are three major credit companies that banks and companies use to establish your credit. See the Resources section for the links to these websites.  You are entitled to a free credit report at all of these websites if you have been turned down for anything due to your credit score.

Pay a little extra to see your credit score if you want to know how to best prepare a potential lender for the truth of your credit.

Tell those at the dealership up front that you have bad credit. Don’t hesitate to let them know how bad it may be. Bring along a copy of your credit report if you like, but don’t be surprised if they still run your report themselves. It is a rule at most companies that they need to verify information to obtain their own reports. It’s just business so don’t be easily offended when presenting your case.

Leave the dealership without committing to purchase when you are first approved for the loan. You are vulnerable as a person with substandard credit.  You are a bit in a desperate situation. Dealerships sense, know and exploit this situation all too often. Leave the lot, and ask around to friends who knows cars and who know finance. You want to make sure that you get a fantastic deal on a car even under your circumstances. Beggars can’t be choosers, but you can stand up for your right to make the best choice for you.

Accept the best loan for your needs after comparison shopping. There are several companies that cater to financing a car to those with bad credit. Make sure you know the difference in different types of loans that they offer. Some will try to offer you loan terms that dictate that the full balance cannot be paid even if you come across the full amount of the loan during the terms. They do this so that you will owe the maximum to them under any circumstances.

Make sure you get–in writing–the full amount you will end up paying for the car under the terms of the loan. It is not unusual for a car that is worth $8,000.00 to end up costing you $13.000.00. It depends on the terms of the loan, the length of the loan and the amount that you have to pay down. The interest rates are going to be sky high if you have bad credit, but you want to make sure you know what you are getting yourself into. While you may feel taken advantage of, you know the right choice for your own personal situation.  Just empower yourself with knowledge.

Ask friends to be references for you before putting their name in print. It is likely that you will need to furnish about 10 references if you have bad credit. You will also need to put down the nearest relative that does not live with you. This is so that the company can track you down if you disappear with the car before completing the terms of the loan.

Make all payments on time. Predatory lenders are quick to repossess. Because of the high rate of repossessions done to those with bad credit, they are always worried of possible dangers.

Pay off the car as quickly as possible. Even if you are only required to pay a small amount each month, pay as large of an amount as you can afford!


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