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Poor Credit Auto Loan

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The government's Cash for Clunkers program has become incredibly popular, with tons of people trading in their old gas guzzlers for new, energy efficient vehicles. But not everyone is eligible for Cash for Clunkers, and some people, even with the rebate, still might not be able to afford a new car -- even though they want one. If you're in this position, you may be considering an auto loan, but convinced that you won't get one because of your bad credit. But it is definitely possible to get a poor credit auto loan.

When looking to find the best auto loan for people with bad credit, it's a good idea to shop around and research your options. Many people with poor credit believe that the first offer they get is the only offer they're going to receive, or that that's the best they can get. Usually, however, this is not true. Even if you have bad credit, it is possible to get a reasonably good auto loan. Read on to learn more about getting a poor credit auto loan.

Best Way to Get a Poor Credit Auto Loan

Your credit score is going to be the biggest deciding factor when it comes to getting auto loans with bad credit. Your potential lender is going to base the interest rate and monthly payment of their loan on how high or low your credit score is. It's a good idea to know what your credit rating is by checking your credit report with TransUnion, Experian and Equifax. Since the sort of auto loan you get is dependent upon your score, check over your report for any mistakes. If there are any inaccuracies, definitely take the time to contest them, because they can lower your score, making it harder for you to get a good car loan.

Usually, when looking to get a poor credit auto loan, the best idea is to get someone with excellent credit who will co-sign your car loan. If you have a credit score of 520 or below, it's probably a good idea to wait to get an auto loan and improve your credit rating, or to have someone -- as stated -- co-sign a car loan. You can end up getting an interest rate as high as 29%, which is absolutely ridiculous. If you get a co-signer for your car loan, you can get a much better interest rate. Just as a warning though -- if you default on your loan, your co-signer will end up having to pay it.

Summary

Getting a poor credit auto loan may seem difficult, but it's possible to get a reasonably good loan as long as you are prepared. Usually when you have bad credit, the best idea is to get a co-signer. Sometimes, it may be necessary, depending on how low your credit score is, that you improve your rating before getting a car loan.