AutoApproved :: Bad Credit Auto Loans

New Car Loans With Bad Credit

October 22, 2007 - 11:23 AM EST

We can help you obtain a car loan for a new or used vehicle, regardless of your credit. To apply, fill out the free 30 Second Loan Application, and we'll take care of the rest.

If you are looking at obtaining a loan for a new car, even if you believe you have bad credit, there are a few things to consider:

First, contrary to what you might think, your options for a loan are typically better on a new automobile, even with poor credit. New cars have a fixed starting value and a well-known depreciation schedule, which enables a lender to make an informed decision. Most also come with a manufacturer's warranty, which allows the buyer to focus more on loan payments, and less on future maintenance costs. All of these reasons allow a lower interest rate to be assigned to the new vehicle.

However, understand that an auto loan is a long-term commitment. In fact, many lenders now offer car loans that are six or seven years long. This is usually much longer than the average person intends to keep a new car when they bought it. Since even the best warranties in the business are usually 60 months (five years) of bumper-to-bumper and 10 years for the engine, the chances are that this car will be in need of maintenance and major repairs long before the car loan is paid off. This is important in planning your budget around your payment, so that even if the car has a great warranty, you may ultimately be stuck with these expenses after the warranty term.

Second, understand that your credit does affect the auto loan. This may seem obvious, but many people are not aware of their credit situation when they go shopping for a new vehicle, or the effect it has on the deal. Special new car programs such as zero percent interest rates are not typically available to individuals with bad credit. Even customers with good credit are not always able to receive a loan under these terms. Understanding that your credit will affect your interest rate on a car loan, it is sensible to obtain a copy of your credit report, or at least know your credit before purchasing a car loan. This allows you to anticipate questions that the dealer or lender might ask about your credit and give you the knowledge you need to deal with any objections to your loan application.

Third, requesting a car loan through several lenders could temporarily lower your credit score further. Rating systems treat all of your auto loan inquiries in a 14-day period as just one inquiry. If you continue to apply at different lenders during a time span greater than 14 days, the multiple inquiries can have a negative effect. Multiple credit requests result in a short-term lowering of credit scores, even if no new debt is incurred. To prevent multiple credit requests, once you apply for a car loan through AutoApproved, there is no need to apply anywhere else.

Finally, one of the most important things to realize when getting a new car loan is to read any fine print. While there may be a standard format to auto finance agreements, there is no such thing as a "standard" contract! You do not take out car loans daily, so some small line of text that a lender considers the standard could be an important issue for you. Read every word and then make the right choice.