Auto Loan Factory

Poor Credit Auto Financing - Getting Approved For An Auto Loan
With Poor Credit
By L. Sampson

Getting approved for an auto loan with poor credit may be
easier than you think. Auto loans are different from unsecured
lines of credit because they use the car as collateral. If you
are unable to make your monthly payments, then the creditor has
the right to repossess the car.

Dealer Financed Auto Loan

There are several options for obtaining an auto loan. Many
small, local, or used car dealerships offer buy-here-pay-here
financing. You finance the vehicle through the dealership and
send them your monthly payments. These programs are often less
selective about the candidates they approve for financing, but
they also generally charge very high interest rates.

Bank Auto Loan

Another option is to obtain a loan through your personal bank.
If you have a good history with the bank (few to no bounced
checks or account overdraws), and you can prove that you are
capable of paying back the loan, they may offer to finance your
purchase.

Most of the larger dealerships have banks that they work with
exclusively. If you chose to finance through their banks, a
loan officer will walk you through all of the paperwork. You
can attempt to negotiate the terms of the loan prior to
agreeing to make the purchase, but you cannot be sure that you
are getting the best deal. Most large dealerships will charge
higher interest rates so that they make a profit off of
obtaining financing for your purchase.

Online Auto Loan

Perhaps the most active and selective means of obtaining an
auto loan is to request quotes through an online database. Many
companies have websites that are partnered with several loan
companies who will consider your credit, income, and work
history, and then present you with the terms of the loan they
are prepared to offer. These services allow you to compare
loans side-by-side and choose the one that offers the best
terms.

If your credit is so poor that you have to accept a
less-than-desirable loan offer, then make sure to always make
your payments on time. Your credit score will improve with each
timely payment. With one year's worth of good credit reporting,
you should be able to refinance your car and obtain better loan
conditions.

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