The best car loan lenders for those with bad credit can be found online. Relying on dealership financing will only lead you to higher rates and fees with limited options. By getting pre-approved for your car loan, you can shop anywhere for your new car. Even better, you save money on competitive rates.

Dealing With Bad Credit When Looking For A Car Loan

Bad credit will affect your options when looking for a car loan. With a score lower than 650, expect to pay a couple of points higher than "A" rated, prime car loans. The lower your score, the higher your rates.

To offset the risk of your credit history and qualify for better rates, you can increase your down payment. A co-signer with an excellent credit score will also get you a lower rate.

But if you do decide on subprime financing, make sure you have the option to refinance with no fees. So when your credit score improves, you can lower your rates and your monthly payments.

Sifting Through Car Loan Lenders

Searching online for your car loan lender will let you skip the trap of dealership financing, which can cost you thousands. Online, you have hundreds of options.

To make your search easy, start with recommended lenders. You can also work with a broker, who will give you multiple quotes from competing lenders. Often broker sites have special financing deals and incentives that can't be found on the individual lender's site.

When looking at lenders, ask for a personalized quote. Based on your general information, lenders will give you the total cost of the loan as the APR. To get a real idea of who has the best deal, compare the same loan amount and terms for each lender.

Sealing The Deal

Once you have selected a lender, you can complete the loan application in minutes online. A blank check and loan contract will be sent to you in one to two business days. You then take that check with you when you go car shopping.

The check is treated like cash at a dealership, improving your negotiating position. It also gives you the freedom to buy a car from a private individual, providing you with more choices.

With poor credit, you can get the lowest rates with the most options by searching for your lender online.