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Can One Obtain an Auto Loan with Bad Credit?

With the loose financial situation prevailing in the market, almost everybody has a bad credit situation. The late credit card and mortgage payments also lead to bad credit and sometimes to bankruptcy. With such bad situation banking institutions have gone very strict in lending money to consumers.

But, there are other ways to get your car financed. There are lenders who offer bad credit auto loans to consumers suffering from bad credit. The consumers just need to prove that they have a source to pay back the loan amount and then the lenders pave a way out for underwriting.

A bad credit auto loan however comes with high interest rates compared to loans for good credit consumers because of the high risk involved. Bad credit auto loan lenders mostly work in association with the car dealers. You will have to find out if the car dealers are allowing financing of the sub-prime customers without pre approved bad credit.

The consumer must also obtain a free credit report made along with a FICO to determine the extent of bad credit. With the help of the report you may short list the lenders which you can approach. Lenders before agreeing to finance will look into certain factors which are much more hassle-free as that for good credit consumers. The factors include – stability in income over a period of time; current monthly payments and current income; budget; the recent payment trend, amount of down payment, FICO score, and bankruptcy position/filing.

The consumers must be reasonable in choosing an auto, keeping in mind the bad credit situation. A bad credit auto loan lender may not be able to get you your dream car but maybe a lesser expensive decently luxurious car from your wish-list.

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