I Need A Car But I Have Bad Credit - What Can I Do?

An automobile is the second largest purchase that most people make in their lives that costs thousands of dollars. If you can't afford to pay cash for a car then auto lenders will finance a car for you today. This way you don't have to wait and try to save up enough money to pay cash for your ride. To qualify for an auto loan usually requires good credit. However, there are some options if you have a poor or a low credit rating.

The Credit Problem

Having bad credit can mean anything from paying your credit cards late, bankruptcy, delinquent payments, and court judgements. Different problems will have different affects on your credit scores. Late payments are rated one-third of your total credit score, they play a big part of your overall score. More serious problems like bankruptcies, foreclosures, charge offs and repossessions can make it almost impossible to get a loan.

Getting Ready

Check your credit reports so you can see exactly what negative information is on your report. Credit bureaus often make mistakes that can drag your score down. If you find errors on your report you can dispute them through the credit bureaus websites. (You can get a free report, once every 12 months at AnnualCreditReport.com). If the credit bureau can't verify the errors within 30 days they have to wipe them off your record. Clearing up these errors could be enough to raise your score so you can qualify for an auto loan.

Really Bad Credit

If your credit is so bad that no one will approve you for an auto loan, then seek out a co-signer with good credit. Lenders will give you the loan based on the co-signers credit. Keep in mind that if you miss payments or default on the loan, you will damage your co-signers credit as well as your own. The bank will go after the co-signer for the entire amount of the loan.

No Other Recourse

If everything else has failed. Then you have one last option for getting a car loan, and that is to go through a sub prime lender and accept the high interest rate and terms of the loan. Don't get discourage with having to pay a higher rate, this is only temporary as you re-build your credit. If you keep your balances low, pay your bills on time (remember this counts for 1/3 of your total credit score) you can often qualify to re-finance within one to two years for a better rate.