How To Get A Car Loan With Bad Credit: 5 Myths Revealed!

You’d like to buy a car but you’ve got bad credit, and we all know what that means; it means that there’s no way you will ever get a car loan. And even if you do qualify, you’ll have to pay astronomical rates. Right?

 

Wrong.

 

The truth is that people with bad credit can get car loans, without paying exorbitant fees. You just have to know how to go about it. If a less-than-stellar credit rating has put your dream of car ownership on hold, take hope. And don’t be taken in by these five myths about buying a car with bad credit.

How To Get A Car Loan With Bad Credit Myth #1

 

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Myth #1: Checking your credit will lower your credit score even more.

Surveys show that many people feel that each time a lender makes an inquiry regarding their credit scores it will cause their scores to drop, resulting in even worse credit. But don’t buy into this myth. The truth is that multiple inquiries relating to the same type of loan, such as an auto loan, won’t lower your credit score if they are all made within a one to two week window. This prevents you from being penalized for shopping for the best rate you can get, which is exactly what you need to do if you’ve got bad credit.

 

Myth #2: If you’ve declared bankruptcy, forget about getting a car loan. It won’t happen.

Even if you have previously filed bankruptcy, that doesn’t mean that it will be impossible for you to obtain a car loan. In the wake of the Great Recession, more and more mainstream lenders and car dealers are willing to help buyers finance a car after bankruptcy. Getting a car loan is a good way to help re-establish credit and build up a positive credit report by making regular car payments on time. And since bankruptcy doesn’t have the stigma that it once had, you may even be able to finance a new car at a reasonable rate if you can show a steady source of income. The key is to research car loan lenders, finance terms, and lending options in your area to make sure you steer clear of unscrupulous lenders who will be all too happy to get you into a car loan with an astronomical interest rate.

How To Get A Car Loan With Bad Credit Myth #3

 

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Myth #3: Vehicle repossession will disqualify you for a car loan.

Having a car repossessed can really leave you down in the dumps. It will also negatively affect your credit rating. But that doesn’t make getting a car loan impossible. As previously mentioned, car loan lenders are more receptive to borrowers with bad credit than they have been in the past. In addition, your car and car loan options will improve dramatically if you’re able to come up with a decent cash down payment. And while the reality may be that you’ll need to resign yourself to buying less car than you may want, if you find the right lender you can still get a good loan on a modest and reliable car that suits your needs.

 

 

Myth #4: Bad credit means you will need a HUGE upfront payment.

It’s true that a large down payment will most likely mean a better loan on a nicer car. But the assumption that you shouldn’t even bother trying to get a car loan because you can’t plop down a lot of upfront cash is just plain false. In fact, if a dealer suddenly insists that an unreasonably large down payment is necessary for obtaining an auto loan, that’s a good sign that the dealer is shady. A number of reputable dealers and car loan lenders are willing to work with you to get you a loan with a reasonable rate and terms regardless of whether you have a down payment or not.

How To Get A Car Loan With Bad Credit Myth #5

 

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Myth #5: Bad credit means lenders will label you too risky for a loan.

While car buyers with stellar credit are certainly welcomed by dealers and car loan lenders, the reality is that the recent economic downturn has taken a credit toll on more people than you may realize. So if you’re thinking that your bad credit automatically labels you as too risky for a loan by lenders, you need to think again. Today’s reputable dealers and car loan lenders understand that a majority of their customers have seen some tough economic times. And many are willing to work with you to see that you get a car loan that fits your budget, thus allowing you to enjoy the many benefits of car ownership while helping you to put bad credit in your rearview mirror.

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