Best Ways to Get a Car Loan with Bad Credit

If you’ve ever found yourself with a not-so-awesome credit score, then you know how precarious your situation can be.  You probably also know, although you don’t feel it at the time, that you are not alone and millions of others have been in your shoes.  

Because most of us have been there and all of us know that life still must go on, there is always help that is available to you.  Getting a car loan with bad credit may seem impossible, or even just unlikely, but it’s really not.  Ohio has creditors that are specifically for bad credit car loans Cincinnati.

Simple Truths

If you’ve ever had to work at improving your credit score, then you know how difficult and timely this process can be.  You’ll come across road blocks and you may stumble along the way, but stay the course.  There are benefits at working hard to improve your credit.  

A simple truth is that your credit score, however ‘not perfect’ it is puts you at a higher risk of borrowing money.  Because lenders see your imperfect score, they estimate that your ability to pay back the loan will be difficult which is what puts you at a high risk.  

The good news: It won’t be this way.  

The not-so-good news: You will have to search for the best interest rate, but you should expect to pay anywhere from 15-20%.

Luckily, you already know that good things never come easy and you are willing to put forth the effort to obtain optimum results.

Being honest with yourself about your financial situation as well as aware of your exact circumstance will help you to move forward.  

Shop Around

With any high priced ticket item you’re purchasing, you want to take it seriously and know you are getting the best deal possible.  Even though your options may be somewhat limited, they do exist and it is up to you to find the best one possible.  

If you don’t happen to like the interest rate at one bank, look at a Credit Union.  If they need a co-signer, look to your local bank.  

While it may seem like more work than you had originally anticipated, it can pay off in the end if it means you save money with a lower interest rate or don’t need a co-signer.  

Apply at a Credit Union

Credit Unions are similar to banks, but they are privately owned by their members, generally by people who all have something in common, like a specific trade or geography.  They are nonprofit organizations which pride themselves on low fees and excellent customer service.  

Because they are a cooperative nonprofit, they do not attach themselves to the same standards as a bank which allows them the ability to offer lower interest rates to those with bad credit.  Also, their nonprofit status makes them exempt from certain state and federal taxes which in turns allows them to have a more liberal approach to lending.  

Look to Local Banks

For similar reasons that Credit Unions will be helpful to you, local banks will as well.  Here’s the difference, you get to use their locality to your advantage.  Because they are a part of your local economy and rely on local business to succeed, you have a greater chance of appealing to them.

Say you only need $3000 for an auto loan, you know your credit score isn’t great, but you recently got hired at a local job site that is currently hiring.  Loaning you money to purchase a car from a local dealer is putting money back into the local economy, as well as building up the credit of a local resident, you, and keeping them successful in your town and state.  It’s a cyclical win for everyone involved and you’re supporting your local economy!  

Set Realistic Expectations

This goes back to being honest with yourself, which if you are, leaves little room for disappointment.  Realistically, you understand your situation so you expect that you are going to pay a higher interest rate.  

Because you already know you the price range of the vehicle you want, and the amount of loan you are looking for, you can subsequently add the 20% (go higher, then you’ll be pleasantly surprised when it’s not as high) and have a general idea of what you’ll be paying.  

Divide that number by the amount of months, somewhere around 24-36, and you’ll have a rough idea of what your monthly payment will look like.  Seeing these numbers will help you budget and pay your monthly loan on time.

This will in turn bring your credit score up which will eliminate this process from occurring again.  It does take time, but it is a cyclical pattern so you will see results.  

Get to Know a Good Lender from a Bad Lender

We all know the old saying “beggars can’t be choosers”, right?  Sometimes we’re reminded of that at certains time in life as a reminder to keep us humble.  Just because your situation is precarious, doesn’t mean you have to settle.  In fact, because you’re situation is precarious and involving your finances, be the exact opposite.  Really take the time to study what is out there and look at your options.  Part of your responsibility is finding a good lender from a bad one.  Here are some tips to tell the difference:  

1. If the first place you check out only offers you money for a used vehicle, but that isn’t what you’re needing, move on.  A good lender will offer you a loan for both new and used vehicles.  As long as you can prove you can make the payments and you aren’t asking for a super top trim luxury SUV, you should be able to find a lender who is willing to work with you.  
2. Some lenders will not consider a borrower who has declared bankruptcy.  This is more common than not.  Sometimes it is understandable, sometimes it’s just snobbish.  A good lender will be willing to work with such borrowers.  
3. Communication is key and knowledge is power.  Your lender should be willing to go over every single word in your contract should you require assistance.  Should you ever have any uncertainties or questions about the car-buying process or loan application, never hesitate to express that.  A good lender is going to educate you to the best of their abilities about this procedure so that you are fully aware.  Any lender who is quick to get you in and out with your signature is not a good lender.  
4. Customer service is an immediate way to tell if a lender is supportive of their clients.  If you can clearly identify their customer service as good or bad, you will know how to expect to be treated.  
5. Good lenders will have all information about loan caps, mileage, and FAQ’s clearly displayed on informational pamphlets, websites or brochures.   
6. Finally, a good lender will have a solid reputation.  You should always check out customer reviews on websites like Yelp, and Angies List.  Strong reviews can help you decide.  Other websites that are helpful are Better Business Bureau and J.D. Power’s Consumer Financing Satisfaction Study, whose sites measure a business success based on customer and inside information.