Are you in need of a new car, but are afraid it's impossible because of your bad credit? Well, the fact is that, today, consumers with bad credit have a wide variety of options available to them in regards to bad credit auto loans. In fact, it can be very easy to get the money you need, but it is important for you to do your research before getting a loan.

If you have bad credit, the first thing that I would recommend is to find out more about your own financial situation. What is your exact credit score (FICO) with the three credit agencies (Experian, TransUnion, and Equifax)? One place that you can find this information is the free credit report service at www.AnnualCreditReport.com . At this site, you can place an order for a free yearly credit report. The credit report has everything but the credit score. You have to pay extra to get the scores, but it is worth it. It is valuable information to have on hand in your search for the best auto loan deal. With this information, you can do quite a few things to help yourself. The first thing you need to do when you examine your credit report is to look for errors. Correcting errors can help bring up your credit score some. Another way to increase credit score is to have a friend, or relative, with good credit add you as an authorized user to their credit cards. This connects their good credit history to yours. If you simply don't know what to do, there are credit repair companies that can help clean up your credit report. I have used a credit repair company in the past and was very pleased with the results.

I definitely don't recommend getting a bad credit car loan from the local car dealership where you buy your car. You will definitely get charged a very high interest rate (APR), and will most likely be fed a load of bull about the bank "requiring you" to buy extras like the extended warranty, glass VIN etching, credit life insurance, etc. etc. The list goes on. One trick that they also do is to say that your credit score is lower than it is just to justify higher interest rates. You just need to know that information anyway. If you don't, it can really cost you in the long run. Let's use an example. Lets say that you're getting 12% APR (could be higher) bad interest loan from a dealership instead of a normal 6.25% APR car loan you might find elsewhere. True, the monthly payment is only about $40 higher for the bad credit loan per month, but over the life of the loan (generally 60 months), high interest really adds up. In the end you pay an extra $2,500!

Keep in mind that bad credit auto loan lenders usually require that you have steady employment and a favorable debt-to-income ratio. Of course, if you cannot demonstrate employment, you are dead in the water anyway. But what the bad credit borrower needs to understand is the fact that this kind of loan can come at a high price, and it pays to research several options before buying.

One of the best places to find a bad credit lender is online. There are hundreds of them there out there. Shop around. Simply google “bad credit auto loan” and several will come up. I would try to go with a well known, established auto loan company. Check out its background with the Better Business Bureau. Be sure to read the fine print and know what the exact terms of the loan are.

Another place to look for automobile financing is your local bank. Sometimes when it is hard to get a loan anywhere else, you can get the money you need from this traditional source. If nothing else, you can get someone else with good credit to co-sign the loan with you. The co-signer assumes equal responsibility for the loan, so it is best to have an open line of communication with the co-signer about your credit situation. On any loan, also be sure that there is no prepayment penalty in the fine print so that you can pay it off early or refinance easily.

When it is all said and done, a person with poor credit does have many options available. It is just a matter of doing the research and keeping an eye out for the best deal available. Your dream car is within reach, and having bad credit shouldn't hold you back.