Bad Credit Car Loans
The worst case credit scenario for all of us is bankruptcy. I read an article by a bankruptcy attorney once that people’s biggest fear when they’re deciding whether to go through bankruptcy is that they’ll never be able to own a home again and they’ll never be able to buy another car. Those fears aren’t really justified, but it’s true that borrowing for cars and houses is going to get much tougher after you’ve gone through the big BK. Elsewhere on this site we’ve talked about getting a mortgage when your credit is bad, but let’s talk about bad credit car loans.
Surprisingly, working with an actual new car dealership might be the way to go when you’re trying to get a car loan with bad credit. You’d think the opposite right? Especially when you drive by those little used car lots and they have the big banners (next to the giant inflatable gorilla) that say “No one will be denied! Everyone approved!” But new car dealerships know that a very high percentage of the people who walk onto their showroom floor have messed up their credit in some way and will need some creative financing.
If you want to save yourself having to drive to the dealership only to find out they don’t want to play ball, call ahead. Ask to talk to the financing department, and if you can get the finance manager on the line ask him or her what kind of bad credit financing options could be available to you. If they say they don’t have anything to offer, move on to the next.
I’d be surprised if that’s the case, though. I’ve heard of plenty of places that are willing to set up some kind of short term lease that they’ll convert to a permanent loan at a lower rate after you’ve made payments for a couple of years. It’s going to be more expensive that way, but you ought to expect that, given your credit status.
You also might be surprised to hear that credit unions very often have great bad credit new car loans. Call around to the credit unions in your area, explaining your situation. If they’re smart, they’ll walk you through kind of a verbal prequalification process on the phone (what’s wrong with your credit, how much do you make, how much are your other monthly debt payments, etc) and then they’ll let you know what programs are available to you.
Yes, the interest rate is going to be pretty ugly compared to what a good credit borrower would get, but who cares? This loan gets you the car you need and it helps you rebuild your credit. If you have to pay 8% to 10% interest so be it. Learn the lesson, make your payments, and enjoy your new car.
