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Getting a Car Loan with Slow Credit

Updated on June 7, 2015

Car Loans

When someone has bad credit, they need extra help with car loans. There are more ads today offering "good deals" for financing aimed at people with bad credit. The credit auto loan process works the same for everyone. People with bad credit are expected to have higher down payments, and they will be required to pay a higher interest rate. Typically lenders will not finance a car that has a monthly payment greater than 20% of your gross income.

New Car Sales

source allcaradvice
source allcaradvice

Caveat Emptor - Buyer Beware

Probably the biggest abuse of car dealers in lending to people with bad credit is they often inflate the price of the car and/or the interest rate if they are doing in house financing. A dishonest dealer might take a car that should sell for $2500 and raise the price to $5000, then take $1500 or more down and charge interest rates of 24-26%. This makes the buyer have a car that is way over book value with high payments and they will often default on the car which further destroys their credit. These dealers run their businesses by “caveat emptor,” or let the buy beware.

Important Considerations before Making the Purchase

The severity of the bad credit will determine whether you can get a car loan, It will definitely impact the amount required for a down payment requirements and particularly the interest. Car dealers typically want down payments of 20% to 50%, plus depending on the state where one lives the interest rate can vary from 5% to 26%. In some states borrowers may use a vehicle they already own as collateral for short term loans at 12% a month. So, when the loan is not paid off another 12% loan must be taken which is effectively costing 144% per years. These loans are illegal in many states and should be avoided.

It is very important to read the fine print on any paper work you sign. Some lenders are dishonest, so besides reading the paper work carefully, also check out the car mechanically. Of course, you want to drive the car and drive it the way you would typically drive a car. Pay attention to the brakes and if the car is in good alignment. If you have a regular mechanic it would be good to let him check over the car before you make the purchase. Make sure you have any type of warranty information in writing.

Ask the dealer to show you the Carfax Vehicle History Report. This is a report based on the vin number of the car and contains a wealth of information. Each report will show any title problems, if the car was in a severe accident, if it's been rated a lemon, if it's been flooded and if it had odometer problems. In addition, the report shows if the automobile has been a rental or a fleet car, if it has high mileage and how many people have owned the car prior to you. The report also reveals information about accidents; if the car was considered a total loss, if the airbags were deployed, if there was frame damage and it will also show service records.

Amortization is the time needed to pay the loan off in full if regular payments are made. Some amortization tables, plus higher interest rates often make higher car payments much higher. It is important to know if you can afford the car payment before you make the deal. If you can make these payments it will go a long way toward rebuilding your credit.

Excellent Tips For Buying A Used Car

How to Find a Fair Value Car

If you are in the position of having poor credit but needing a car there are a couple of things you can do. If you find a particular car you like check out what its true value should be by looking online. Check the internet for car values at Kelly Blue Book or

At least you will know what the car should be worth. Next, add a $200 to $500 profit for the dealer. A larger down payment will help you get better financing.

Edmunds also has a car loan calculator which might be helpful.

Internet May Help Find that Loan

There are also dealer network systems on the Internet. They list good and bad car dealers, but you may be able to purchase a car by filling in the forms to find out what a particular dealer offers you. There are no fees involved.

Application services on the Internet also might be helpful. You are required to fill out your in-depth financial information, and this involves multiple submissions of financial information to potential lenders. You may hear from several lenders willing to make the loan

Auto Loan Advice : How Does Auto Loan Interest Get Calculated?

In Summary

By following the above methods you will have the best chance of getting a good car at a reasonable value with a decent interest rate. Just because you have bad credit doesn't mean you don't deserve a good car and a good car loan.

Sometimes, if you are in the middle of a bankruptcy, or have no money down you may have more difficulty finding a reasonable car loan. Even is your first attempt at financing fails, keep trying and as soon as possible do every thing you can to improve your credit. Help for bad credit car loans is possible, but sometimes it takes persistence.

© 2011 Pamela Oglesby


Submit a Comment

  • Pamela99 profile image

    Pamela Oglesby 5 years ago from United States

    Joyce, I tried to share important information that would help people. Thank you for your comments.

  • moonlake profile image

    moonlake 5 years ago from America

    Voted Up. Good information that everyone needs now days. You put a lot of work into this hub.

  • Pamela99 profile image

    Pamela Oglesby 5 years ago from United States

    I agree. It is so important to maintain good credit if at all possible. Thanks for your comments.

  • profile image

    thomasgrayy 5 years ago

    It is true that when people have poor credit score then they need extra help to improve their credit rating. Bad credit people looking for buy a new car should have to good credit score. Good credit ranking makes more chances of getting high amount of finance for auto.

  • Pamela99 profile image

    Pamela Oglesby 6 years ago from United States

    Support Med, The topic is the one from Hubpages for the day. Thanks for your comment.

  • Support Med. profile image

    Support Med. 6 years ago from Michigan

    Looks like you're really into teaching credit lessons lately. Good to know. v/r

  • Pamela99 profile image

    Pamela Oglesby 7 years ago from United States

    AskAshlie, I hope things get better for you. Thank you for commenting.

  • AskAshlie3433 profile image

    AskAshlie3433 7 years ago from WEST VIRGINIA

    Yes, good info. My husband has bad credit, and so do I. Someone charged bills in my name when I was 10 years old. They still haven't took them off. We are trying to find a car but not much luck.

  • Pamela99 profile image

    Pamela Oglesby 7 years ago from United States

    HELLO, Thank goodness as bad credit is difficult to overcome but it can be done. Thanks for your comment.

  • Hello, hello, profile image

    Hello, hello, 7 years ago from London, UK

    Very, very helpful information. That is one thing I haven't got.

  • Pamela99 profile image

    Pamela Oglesby 7 years ago from United States

    JY, Thanks for your comment.

  • JY3502 profile image

    John Young 7 years ago from Florence, South Carolina

    Good story Pam. Voted up

  • Pamela99 profile image

    Pamela Oglesby 7 years ago from United States

    rpalulis, I would love to pay cash for mu cars. Unfortunately that is not always possible which is why we keep our paid off car that runs well. Maintenance I think makes a big difference. I feel bad for people struggling as I know many are laid off therefore, there credit takes a hit. Thanks for your comments.

    Darsky, I'm very glad this might be helpful to you and I appreciate your comments. Our gas mileage isn't great either and we are really careful to try and combine errands and try to go to the grocery store and drug store less as that seems to be the reason I am in the car half the time. Thanks for the comment.

  • Darlene Sabella profile image

    Darlene Sabella 7 years ago from Hello, my name is Toast and Jam, I live in the forest with my dog named Sam ...

    Oh Pam this is really really a great hub, I hope you win. I have been thinking about this so much now, I have a wonderful car but it's an V8 and the gas is kicking my butt, I do not have good credit and my car is paid off with low miles. It's really a problems because the gas situation is going to get worse. So this was wonderful and helpful, kudo's to you rate up great job, peace & love darski

  • rpalulis profile image

    rpalulis 7 years ago from NY

    Wouldn't it be great if we could all pay cash for our vehicles. Something to strive for right! Well until we can these are great car loan tips, I can totally see the risk lenders are taken and also feel the frustration of the buyer as well.