The 6 Best Ways to Finance a Car with Bad Credit: Auto Loan Tips

Traditionally, the only way for a person with poor credit to obtain a new car was with cash (which actually makes a lot of sense when you think about it–you do own the car outright and there's no monthly reminder from the bank), but today you can finance a car with bad credit. Here's how to do it:

1. Make an Effort to Bring Overdue Bills and Payments into Line: When the credit industry sees you are making an effort to straighten out your wayward spending and paying habits, a funny thing happens. Your FICO or credit score goes up and you become more creditworthy. The result is a car loan.
2. Use a Strong Co-Signer: If you have an agreeable family member or friend who will act as the co-signer for your car, then the chances are very good that you will easily be approved for a car loan, no matter what your credit score or history may be. The reason is that the co-signer is equally responsible for the vehicle, so you had better make sure you make the monthly payments or you could risk hurting that person's credit.
3. Use the Internet: You probably see this type of spam at least every hour or two: "Pay day loan available–no credit check; money overnight." The no credit check car loan seems like a great boon to you if your credit is nil and you need new wheels, and it is an alternative if you find a real company at the end of the spam. You may just find a phishing mill that is out to steal your vital information, and then move on and the "Treasurer's Check" that's issued is worth the same as Monopoly money. Be careful with this type of loan. If it is a real outfit, the chances are good that the interest will be usurious or worse (over 40 percent). It is an alternative, but not a great one.
4. Other Loan Sources: Believe it or not, there are people who will pay for their cars with their credit cards, and in some ways a credit card loan does make perfectly good sense to do it this way. If the dealership permits it, you just take the car out for a test drive. If it's what you want, you then pull out the plastic and if the credit line is high enough on the credit card and there is enough room for the entire purchase, then all you have to do is have them swipe the card through the reader, sign the papers and you are a car owner, of sorts.
5. See a Lender that Accepts High Risk: Check out bad credit lenders first and make sure they're giving bad credit car loans. You don't want to apply to a lot of lenders, because they will all perform a credit check. Too many credit check inquiries may increase your bad credit standing. Look for the right lender that ensures you they offer bad credit car loans.
6. Try Credit Unions for a Bad Credit Car Loan: If you belong to a credit union, ask them first about the best way to finance a car with bad credit. Credit Unions serve their members, not a board of directors, so they'll actually look for a way to keep interest low when asking to finance a car with bad credit.