How to Get an Auto Loan with Bad Credit

Get the loan you need for the car you deserve.

It’s a new year, and many of us have resolutions. Goals we want to achieve, things we want to do, and, more often than not, cars we want to buy. Still, getting an auto loan with bad credit can seem an unusually lofty goal. But you can start the new year behind the wheel of a new car, if you know how to find the right financing.

You might be wondering, especially if you’ve had difficulty getting lenders to talk to you about other types of loans, why cars are different. There are a few reasons for this, ranging from the overall market to the nature of bad credit car loans.

The simplest reason is really that most people need a car, and the market for cars doesn’t vaporize just because the economy isn’t great. Whether the economy’s humming or we’re all getting back on our feet, people still need to get to work, pick up the kids, and run errands. So, as the demand shifted, auto loans became easier to obtain for those with poor credit.

Secondly, a car loan has a few differences from another type of loan. First of all, they’re generally for far less money than, say, a house. For another, they’re for a tangible asset that has value, so lenders generally feel better about giving a car loan to those with poor credit as there’s less risk involved.

Finally, there are far more lenders for car loans as the market has expanded, meaning there are more opportunities for bad credit car loans. Even as recently as a decade ago, there weren’t many options for finding auto financing; you could go through the dealership, or perhaps your local bank, and if they turned you down, you had to make do.

Everything has changed with the rise of the Internet and changes in how cars are financed and sold. There are even lenders who specialize in poor credit auto financing. The question, in this case, becomes finding the one that’s right for you, to start the new year off right.

The first step is to know what you’re shopping for. Look for a loan that has the shortest overall term and the lowest interest rate. Remember, how long you pay the loan and the interest you pay on the loan essentially determine how much you pay for the loan itself. You wouldn’t spend thousands of dollars on anything else without comparing prices, so why do it with your auto financing?

The next step is to apply to as many places as possible. There are many, many lenders, and they all look at different factors in different ways. This can have impacts on your loan quotes that can surprise even experienced finance experts, so you’ll want to ensure that you get the broadest range of quotes. For example, Federal Auto Loan allows you to file one application and look at many quotes from a wide range of lenders.

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