Car Loans For Those With Poor Credit: 5 Tips

For poor credit individuals, qualifying for a car loan might feel like an almost impossible task. However, fear not - you do have the chance to get the wheels you need, regardless of your credit score.Here are 5 tips that you cannot afford to ignore:
1. Prepare to pay a higher down payment and interest rate
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It may come as no surprise to you that obtaining car loans for those with poor credit means paying a higher down payment - and paying a higher interest rate - than would someone with good or excellent credit. Of course, some folks with poor credit feel that they have no chance for getting a car loan at all. Happily, that's not true anymore. Regardless of your credit history, somewhere out there is a dealer (paired with a financing company) who will be willing to extend you an auto loan. Go into it knowing that your interest rate will be higher, but also go into it with the confidence that you can get the loan you are looking for.
2. Watch out for lenders who try to inflate their auto prices
There are many auto dealerships who work specifically with people who have poor credit histories. Unfortunately, as with any industry that caters to folks who are down on their luck or have made a few poor financial choices in the past, there will always be a few unscrupulous dealers preying on innocent victims. These dealers may offer what seems to be a fairly competitive interest rate, but at the same time they may choose to jack up the price of the auto loan much higher than car's market value. This is technically not illegal, but borrowers need to beware. Before you sign on the dotted line, check the fair market value of the car you are purchasing. You don't want to end up with a loan that is much higher than the resale value of the car.
3. If you use a dealer network, check out their geographical coverage first
One option for obtaining a bad credit car loan is through a dealer network. These networks are usually accessed through a website. You fill out an application, and your information is then shared with multiple dealers who compete for your business. Dealer networks range in size from 5 to 500 or more dealerships, so make sure that the network you apply with actually has dealers in your area.
4. Consider a multiple submissions network
A multiple submission network is another viable option available to you. This is similar in some ways to a dealer network. The main difference is that with the multiple submission network you are dealing directly with the lending institutions themselves. After you fill out an online application, it gets passed to multiple potential lenders who then compete to get your business. This competition is a good thing, as you stand to get the lowest rate possible for someone in your credit situation.
5. Do not trade a car that you still owe money on
A final word of warning: be sure to avoid trading in your current car if you still owe money on it. There have been nightmare stories whereby the purchasing dealership defaults on the loan 10 days or so after the transaction is complete, and this can further damage your credit score since it is still in your name.
Bottom line is: getting car loans for those with poor credit is not impossible. In fact, it can be pretty easy, and there a lot of options available to you. Remember to go into the situation armed with all of the facts and watch out for common pitfalls. That way, you will stay out of trouble as you slide behind the wheel of your new vehicle.