Happily, bad credit car loans are not very difficult to get these days. Since so many Americans have or have had bad credit, entire companies have opened with the sole purpose of providing bad credit car loans to people with less than stellar credit. The hard part is getting the rate you want. This will take more time and effort.
The bad news is that, obviously, bad credit car loans offer higher APRs (annual percentage rates) than good credit car loans. But that's no reason for you to sell yourself short. Don't assume the first bad credit car loans you're offered will be your best deal. Here are some good places for you to look for bad credit car loans:
- Your local bank or credit union. Since you already have business with them, and they want to keep your business, they will likely be more willing to work with you than most other places
- The Internet. For sheer volume of providers for bad credit car loans, nothing can beat the Internet. It is also a relatively fast way to go, if you are in a hurry.
- Home equity loans, or lines of credit. These will give you lower rates than just about anything else out there, so if you own a home, check out your options with your mortgage company.
- The dealership you are buying your car from. As a general rule, this is not the best way to go. But it can't hurt to hear what they have to offer. Maybe you'll be pleasantly surprised by the APR of their bad credit car loans.
Getting your financing options lined up in advance is particularly important when you are looking for bad credit car loans. Your options are limited when you have bad credit, so you might as well know them all. This prepares you to negotiate rates with the dealer, you'll know if he's trying to give you an overly high APR.
Don't, however, become so caught up on bad credit car loans and APRs that you forget to negotiate the price of the car. Most salespeople have a profit range of 10-20 percent, and the first price offered is not the lowest one they'll give you. Many salespeople try to combine the purchase of the car and the bad credit car loans into one transaction. Keep them separate in your mind, know exactly where your money is going so they can't overcharge you.
More good news for you: even if the bad credit car loans you can get offer higher APRs than you want to pay, the APR you initially sign for isn't the final word. You can refinance your car as soon as three months after you initially finance it, often at a much lower rate. Expect to pay a one-time fee with the refinance, but the fees are not strenuous, ranging from $5 to $65 depending on where you live. If you make your payments regularly, and continue to build credit, perhaps several months from now you can refinance with good credit, instead of having to find bad credit car loans.
Bad credit car loans are easy to find lately, and with a little comparison shopping for bad credit car loans you can probably get a better rate than you expected, and it's even more reassuring that if your first search for bad credit car loans doesn't get you the APR you wanted, before long you can fix that.