Bad Credit Auto Loans

Bad-credit blues? Worried that your less-than-perfect credit is going to keep you from buying the car you want? Don't be. Bad credit doesn't always lock you out of a car loan. For many different reasons--the loss of a job, illness, divorce, unexpected bills or other personal emergency situations--people find themselves with a bad credit history.

Across the world there are millions facing problem with credit. Being among millions of Americans, makes it possible for you to get a bad credit auto loan but requires a realistic idea of the effect your problem with credit will have on the loan you eventually get. A history of credit problems has the same effect on auto loans as it does on an application for any kind of credit.

Chances are you will be able to land an auto loan. Today, banks, credit unions and finance companies are all making loans to people with flawed credit. Many people who wouldn't qualify for an auto loan five years ago can get one now.

Remember, dealers want everyone to buy their cars, and that includes folks with dinged or damaged credit. So in addition to offering financing from a manufacturer's finance company, such as GMAC (General Motors Acceptance Corporation) and Ford Credit, they also have financing deals with banks, credit unions and finance companies. You may not get the best rate out there, but they'll get you in a car.

But also remember, dealers take a cut of all financing deals they land. So a loan from ABC Bank through the dealer may have a higher interest rate than the loan you'd get if you applied to ABC Bank on your own.

Interest rates on loans for folks with bad credit range from 10 percent to more than 20 percent. The key to landing a better rate is to shop around.

Creditworthy means the likelihood of your paying back the loan and making the payments on time. Your "creditworthiness" is the single most important factor lending institutions look at when deciding whether to grant you a loan on the terms you requested. Your creditworthiness determines how much you can borrow, for how long you can borrow and your interest rate. Your creditworthiness is derived from many factors such as your income, your credit history, your current debt load and your repayment history. This information usually comes from your Credit Report.