It is a fact of life these days. Sooner or later most people end up taking a hit on their credit rating. With wide-spread lay-offs and a soft economy, it is going to happen to lots of people.

The burning question is; what do you do if you need to purchase an automobile? This is a huge source of stress for most people who have bad credit. But don't worry, there are options for you. Most car dealers understand that real people sometimes get bad credit. Here is how to go about getting your bad credit auto loan. Also you have to remember that auto dealers are in the business of selling vehicles. They want to sell you a car, but they also must make sure that they get paid for it. So here are a few tips that will help you to get a loan even if you have less than stellar credit.


Here are a few things that you need to do before you apply for a loan. If you do these things you will drastically improve your chances of approval.

1) Ensure that the payments on the loan are within your budget. There are many websites available that will give you an estimated payment on different types of loans. You should be able to obtain an estimated payment based on the price of the car, the duration of the loan, etc.

2) Ensure that the car has a clear title. This means that there are no leins against it. There are many websites that you enter the VIN number and it will search for clear title. These websites will also give you a vehicle history report. The history report will also tell you about any accidents the vehicle has been involved in.

3) You will also need to  research the blue book value. This is based upon mileage, condition of the vehicle and of course, the year it was made. This value can also be looked up online. The agreed upon price cannot exceed the blue book value.

Of course, you need to understand that your interest rate is going to be high due to the fact that your credit rating is not good.


Your interest rate will be calculated based on the following factors:

1) Your credit history.

2) New and used cars have different interest rates.

3) If you give the loan agency a larger down payment, you will obtain a better interest rate.

4) The duration of your loan will affect your interest rate. Shorter loans receive lower interest rates.

5) Loans that are co-signed for also obtain better interest rates.

Bad credit loans can be written by most auto dealerships, or you can apply to lenders you find online.

One tip is to ensure that you only apply to each lender once. Each time that you apply for a loan, the lender checks your credit. Each time your credit is checked, you lose a few points on your rating.

The one thing that you must have when applying for a bad credit auto loan is proof of employment. If you look on your paystub, there should be an area for payments made to you Year To Date. This provides proof that you have worked there for a while. If you do not have this information on your pay stub, you should ask your employer to provide proof for you.

You can get a loan, even if you have bed credit. Another thing to remember is that if you get a loan and then have a good payment history, your credit will improve. So get your auto loan and then ensure that you always pay it on time!