It's becoming more common for people to have a bad credit rating. The problem is, a potential lender will see your poor credit history when you put in a loan application, and disqualify you from getting the loan. The good news is that there are other options if you have bad credit and want to buy a car. Some lenders provide bad credit auto loans specifically for people with a poor credit history. But there's bad news too - generally the interest rates on a bad credit auto loan are much higher than they are for a standard auto loan. This is because the loan company is taking a big risk lending you money, so they charge you more to compensate them for that risk. If you can make a large down payment or buy a cheaper car you will reduce your payments accordingly.
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If you need to improve or even re-establish your credit standing, then getting a bad credit auto loan can be a good place to start. Showing you can make your payments on time over a reasonable period will help to reassure other credit providers that you're a reasonable risk. Dealers and lenders have set up bad credit auto loan programs to make it easier for people with bad credit to get a car, as for many people nowadays a car is a basic necessity for getting to and from work. And they need to go to work if they're going to have the money to pay back their loan!
In most respects, apart from the interest rate, a bad credit auto loan is the same as a standard auto loan. The difference in interest rates, however, can be very substantial - some dealers can charges rates in excess of 30% on bad credit auto loans. For someone with an average to good credit rating, the interest rate on an auto loan can be in the range of 2% to 5%. It's also very important to make sure you pay your loan payment on time every month. Otherwise, if you mess up a bad credit loan, you may find it almost impossible to borrow money again for a long period of time.
So if you do manage to qualify for a bad credit auto loan, do everything you can to make sure you take advantage of this second chance. Never become complacent or lazy about your payments. Also, be sensible when you're choosing a car, and remember that you're going to be paying a very high interest rate - so choose a cheaper car. Be patient, and when you've got a better credit rating and can get a standard auto loan, you'll be able to afford the newer and more expensive car you really want.
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