People with bad credit need to buy cars too, however, what they often find out, they do NOT have as many options available to make that purchase possible. Many lenders are reluctant to provide loans to customers with poor credit score, and sometimes it may seem that the ONLY option available is to take a loan through a car dealership.

Getting financing from the same place where you are planning to purchase our car may also seem like a smart and convenient way to go. While car dealership loans have a bad reputation, they are not as bad as many people think.

However, you need to be extra careful and read the fine print to avoid unpleasant surprises that will cost you money. Although most car dealers are honest people who just want to earn a living, some of them are unscroupulous sales people that will try various tricks on you just to make more money.

Keep in mind that it’s hard to negotiate loan terms and interest with car dealerships and getting a good deal will be really difficult. That is why it is a good idea to get approved for a car loan BEFORE you go shopping for a car. What many people with bad credit don’t realize is that it may be easier to get approved directly by a lender than trying to negotiate fair deal with a car dealership.

Where can you find a bad credit car loan provider?

The best place to start your search is the Internet. It’s easy to find lenders that offer bad credit car loans.

You can contact them directly by filling out online forms or sending an email. Learn about different options that are available to you. Do your homework and shop around by comparing terms and rates before making your final decision. The online lenders usually provide hassle free application processing and great customer service.

For example, your best option may be a Secured Bad Credit Car Loan. The collateral that will secure the loan will usually be the car, although if you can provide another asset as security, you may get a lower rate and longer repayment period of the loan, making it even more affordable.

Many people are scared of secured loans fearing the risk of repossession, but the truth is that even with an unsecured loan the lender can take legal action against you to recover the money.

Car loans for people with bad credit are offered online by lending companies to consumers with bad credit score, if they meet some minimum qualification requirements:

• The applicant needs to be 18 years old and a resident of the United states. Most of the lending institutions require a phone number and a proof of residence.
• The borrower needs to have a guaranteed fixed monthly income.
• People with temporary employment and people who cannot provide a proof of income usually cannot qualify for bad credit car loan.
• If you changed jobs recently, be prepared to show evidence of past employment dating back up to two years.
• Some lenders may require the borrower to make a down payment. The amount of down payment varies depending on the type of the vehicle and the credit history of the borrower (find out how to find out where you stand on the credit score scale and how to raise your credit score).

The real “secret” for getting the best deal on a car is to avoid any intermediaries:

1. If you need a car loan, contact the lender DIRECTLY.
2. If you plan to trade-in your old car, sell it directly by placing an ad in a local paper or – better yet – on the internet and you are almost guaranteed to get more money for it.
3. If you can purchase the car straight from a private owner – again from a paper or through the internet, you can save up to a few thousands dollars, making the whole deal really worth your while.

Since not everyone has the time and desire to buy the car directly from the owner, a smart thing to do when dealing with car dealerships is to decide IN ADVANCE on the car price and maximum monthly payments you can afford to make.

When shopping for a car keep those numbers in mind and do not ovestretch your budget. Do not get tricked into buying any extras that you don’t need. For example, a dealer may try to persuade you that you must purchase a warranty to qualify for the loan. This will only increase your loan cost, while providing more profit to the dealership.

Remember to only apply for a loan that you are sure enough you will be able to REPAY without missing payments or making late payments. If you pay on time every month as scheduled, it will help you improve your credit score, since the timely payments will be recorded into your credit history. An improved credit score will make it possible to refinance your loan at a lower rate in the future.

Interest Rate Markups

• What you must know is that car dealerships make money not just on the price of a vehicle, but also on the financing that they arrange. The finance manager at the dealership has agreements with lenders that allow him to mark up you interest rate. So, for example, if you are approved for a car loan at an interest rate of 8%, the finance manager may tell you that you are approved at 12%. The 4% difference between what the loan company actually charges and what you agree to pay is pure profit for the dealership. If you have bad credit history and the dealer knows that you are anxious to get approved, he may try to take advantage of you making you pay higher interest rate that you normally would be paying.

Interest Rate Changes

• When you sign the loan documents you must make sure that the interest rate is clearly stated in the contract and no changes are allowed at a later date. What some car dealerships try to do is to process and aprove you car loan application, have you sign the documents, and hand you the keys to your car. Later on they will contact you saying that because of your bad credit score you did not qualify for the loan and you must pay higher interest rates in order to keep the car. If you find yourself in this position, you should go look for a loan from another lender or report the dishonest dealer and fight back.

Cosigner Loan Trick

• One popular trick that some car dealers may try on buyers with bad credit history is telling them that the only way they can get financing is to find a cosigner for their loan. Some sales people will even tell their customers that getting a cosigner will help them improve the poor credit score. While it sounds reasonable – after all, finding a cosigner with a good credit score is a great way to get a better deal on a loan; you may later discover that your name is not even on the loan documents and that the loan is in the name of the cosigner only, even though you are making the payments. First of all this is illegal, and may lead to serious penalties, and second – it will not help your poor credit at all. If a dealership requires you to do such a thing, you absolutely must refuse.