Getting a car loan when you have bad credit

Bad credit ratings affect you in many ways but of course most of all when you need money for a big investment such as a car. Your choices of funding are of course limited but not totally non-existent. You may find it is very difficult for you to get a loan from your bank, credit card or other unsecured loan to pay for a car so you may need to get finance secured on the car though.

You will find that finance rates on a second hand car are likely to be much lower, even if it is only a couple of years old. With new cars a lot of the price is because it is a new car and a month down the line this value has gone. Those financing then are taking a bigger risk and the security suddenly drops in value. With a second hand car the value drops much more slowly so the finance company is taking a smaller risk and will therefore offer you a lower rate.

Some large car dealerships offer the finance themselves while others may use a car financing company to finance it and literally just sell the car. The different finance companies though may offer you different rates. If you are shopping for a car then you are of course limited to dealerships that offer finance and you wont be able to buy privately but it is still worth shopping around. Often you get a lower rate the more you borrow as well so a more expensive car may be better value and you can still sell it for more once you have finished paying for it.

Some dealerships even specialize in great deals for people with poor credit and may offer the best deals so look at a few cars and a few quotes for finance and see what is the best value.

Jun 7th, 2011