Buy A Car With Bad Credit

If you have bad credit you will find it more difficult to get a loan through a bank. In general finance companies try to avoid lending to "risky borrowers." If you have Poor, Bad, Or Very Bad credit you still have some options for financing a vehicle purchase.

Your best bet is to work with a service or dealer that specializes in bad credit auto loans. These providers will charge you a higher interest rate, but if you need to get reliable transportation and can't qualify for a traditional loan this may be your best bet.

Before you start applying for any financing you should find out your credit score. I use Credit Karma to monitor my score, it is completely free and is fairly accurate. Using these numbers as a guide determine what category of borrower you are:

• 720 UP - Prime Credit
• 680 UP - Good Credit
• 640 UP - Marginal Credit
• 600 UP - Sub Prime Credit
• 580 UP - Poor Credit
• 525 UP - Bad Credit
• Bellow 525 - Very Bad Credit

If you fall into Sub Prime, Poor, or Bad credit do not try and apply for traditional financing. Every time you apply for credit regardless of whether you are approved or not your credit score may be lowered. Obviously if your credit is already poor you want to avoid anything that will lower it further.

At this point you may want to think about how urgent your car purchase is, if it can wait a month or two there are a number of things you can do to raise your credit significantly which may be enough to get you a better private party auto loan.

Some things you can do to improve your credit score immediately:

• Paying off outstanding balances on credit cards
• Ordering a copy of your credit report and making sure there are no errors that could be corrected

If improving your score is not an option because your score is nowhere near "marginal credit" or because you need to buy a car right away in order to get to work then you should consider working with a loan provider who specializes in bad credit auto loans.

If you signed up for Credit Karma they will have offers listed based on your credit score, or you can look for local dealerships that do their own financing. You will be charged a higher interest rate, but you are not in a position to best deal at this point.

These providers may be willing to work with you to arrange weekly or biweekly payments to coincide with when you get paid. If you make your payments on time this bad credit loan will help rebuild your credit score and in the future you may be eligible for better rates.

One thing to keep in mind is that as your credit rating improves you may also be eligible to refinance into a loan with a lower interest rate. So always be monitoring your score and looking for a better deal as you regain control of your finances.