For many Americans with problem credit, the thought of buying a car is a daunting one. In the past, many banks and auto dealerships wouldn't give you a bad credit auto loan. They felt that people with troubled financial pasts were too much of a risk. However, now, the climate in America has changed substantially, so that many banks, credit unions, and auto dealerships will issue bad credit auto loans.
Now, interest rates can vary tremendously with these bad credit auto loans, so you'll want to do some shopping around before you decide on the car you want to buy. However, before you even begin to shop around, you will want to get a current copy of your credit score and rating from the credit bureau. Make sure that all the information the report is 100% accurate. There's no point in getting a higher interest rate on a bad credit auto loan because you have errors on your credit report.
Once you've made sure you know your actual credit rating and that it is correct, you need to check a variety of banks and credit unions in your area. While a car dealership will usually check all these sources for you when they are trying to get you financing, the dealership will tack an additional 2 to 4 percent on to any interest rate they manage to get you on your bad credit auto loan. As such, if you negotiate with the lowest interest bank first, you will usually be able to secure that same loan without the mark up from the dealership.
How do you get those banks and credit unions to deal with you in the first place for bad credit auto loans? Well, experts agree that the best thing you can do is to go to the various banks in person and sit down with a loan officer. Once you're looking a loan officer in the eye, be up front with your problem credit history and be sure to tell him how you came to have problems. Many people have illnesses, or divorces, or times they couldn't pay all their bills when they were out of work, and the loan officers will understand that and be far more willing to work with you, than if they just read a sheet of paper with your credit score on it.
While the amount of dings you have on your credit will ultimately determine your interest rate on a bad credit auto loan, you don't have to get the first rate that's offered to you. If you take your time and shop around, you can usually find a pretty good deal on an interest rate and a term that you can handle.
