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How Hard is it to Get a Car Loan with Bad Credit?

Getting approved for an auto loan with bad credit is easier than it has been for several years. As the recession has eased, so have the lending standards of many institutions. You can improve your chances of approval in a few ways.

Start with your credit report at www.annualcreditreport.com. Try correcting any errors that you may find. Also, if there are any positive accounts that are not showing up, contact the holder of that account to see if they can start reporting it.

Next, the worse your credit is, the lower the price of the vehicle you look for should be. This may mean changing the car you want to some extent. For obvious reasons, lenders do not want to risk $30,000 on someone who has a habit of not paying on time. Start by looking at smaller base model vehicles. All of the major automakers offer this type of vehicle. Look at autos that cost less than $15,000. If possible, try looking at used vehicles. You can get a very reliable ride that is 3-5 years old and save several thousand dollars while maximizing the chances that your loan application will be approved.

Lastly, be sure to have a down payment on hand. Since you have bad credit, lenders want to see that you are vested in the vehicle they are loaning against. Your down payment should be at least 15 percent of the purchase price, 20 percent is better. The more you put down on a car, the better your chances of being approved for a loan will be.

As we have discussed in earlier posts, it is not all that hard to get a car loan with bad credit, especially if you apply online through us.  The important thing is getting the one that suits your budget and goals.

About the Author

The author has many years of experience in automotive finance and insurance. However, each consumer's situation is unique. It is best to contact a finance specialist for further assistance.
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