Bad Credit Car Dealer -- How to Approach Your Loan

Getting a vehicle loan with bad credit is not impossible, but it does take a little extra creativity. When you approach a bad credit car dealer in an attempt to get a loan, you need to have done your research thoroughly, or you put yourself at risk of being taken advantage of. If you visit the dealership armed with the right knowledge and strategy, it is possible to get a fair deal on your loan.

First, before you begin, get a copy of your credit score and history. You should know what your rating is, so you can be certain the dealership is being honest about just how "bad" it is. If you are at the top end of the "bad credit" spectrum, you have more bargaining room than if you are on the very bottom.

Next, take some time to save money to make a large down payment. The larger your down payment, the better your chances of acceptance at a bad credit car dealer. This makes you appear less risky to the lender. Also, it can earn you a lower interest rate, because some of the vehicle's value is secured by your down payment.

Another strategy to consider is getting a cosigner. A cosigner is someone who has decent scores who is willing to sign with you for the loan. The cosigner is not the one paying the loan, although that responsibility will fall to them if you fail, but is simply lending his or her approval and guarantee to the loan. Only do this if you are certain that you can pay, because having the loan fall back on your cosigner will jeopardize your relationship with that person. Only choose a cosigner who has decent scores.

If you go to a bad credit car dealer, then you will be working with a company that specializes in people in your situation. Do not expect to get the best possible rates on your loan. A poor rating means that you are going to have higher rates. However, that does not mean that a loan is impossible. If you are willing to accept the higher rates, then you can get a loan.

Collateral is another option you can consider when looking for a loan with poor scores. If you have something of value, like your home, then you can put up in collateral for the loan, then you might be able to get approval. Your dealership may offer a scenario like this to help people like you get a loan.

Remember, you are not tied to shopping for loans with a bad credit car dealer. You can go to your local bank, shop online, and look at many other sources before deciding on your loan. You want the best possible deal, and competition is available, even for people in your situation, so do not go with the first loan you are offered. The Internet can be a valuable source of information on loans, and even a place to get pre-approval, so make use of it before you begin shopping.