| So what should you expect from car lenders when | | | | inquiries may lower your credit scores. Make them |
| you have bad credit? | | | | understand that you do not want them reviewing |
| How do you go about getting a car loan when you | | | | your credit scores and credit reports. If they persist |
| have bad credit? | | | | on making a copy of your driver's license for |
| Below are highlights of things you can expect while | | | | "insurance purposes," tell them to put in writing that |
| buying a car if you have less than stellar credit. | | | | they will not review your credit. |
| Consider the Following Prior to Buying a Car with Bad | | | | - The most important thing is to first talk with the |
| Credit | | | | finance director at the dealership. The finance director |
| There is no need to put several thousand dollars | | | | will be able to tell you what you qualify for. Then ask |
| down to lease or buy a new car. The most cash you | | | | to talk to a salesperson. |
| should need for a car loan (even with bad credit) is | | | | Expectations when You Walk into a Car Dealership |
| $500 to $1,000-and that's if you do everything | | | | - Expect the car salesman to sell you a more |
| wrong! | | | | expensive car than you need. Don't let them |
| Anything more than that and you're either at the | | | | convince you to buy a car you don't need or can't |
| wrong auto dealership or you're looking at the wrong | | | | afford to pay for. This is why you must talk with the |
| car. | | | | finance manager before the sales person. Don't |
| It's best to start small and slowly graduate to you | | | | forget that the finance manager is who directs the |
| dream car. You can make it your goal to ultimately | | | | salesman the car you can afford. |
| get the car of your dreams. But, for now, you're | | | | - Expect that if you treat car dealership employees |
| going to have to settle for a more economical one. | | | | well, they will treat you the same way in return. |
| Research Potential Cars and Auto Dealerships | | | | They want you as a life long customer. |
| - Start by going to Not only can you get information | | | | - Expect to pay more for your auto insurance if your |
| on what rates and rebates are offered from every | | | | credit score is low. That's right, in most states |
| auto dealer, but Edmunds lists used car prices and | | | | insurance agencies are allowed to use your credit |
| certified rate programs. Don't forget that there are a | | | | score to determine insurance premiums. Make sure |
| lot of car dealers who want your business. This | | | | you consider this when deciding what is in your |
| means that there are a lot of opportunities for you | | | | budget. |
| to find a great deal. | | | | Financing an Auto Loan with Bad Credit |
| - Do the leg work and interview as many auto | | | | Financing a new car with bad credit is actually easier |
| dealerships as you can. Remember to not allow them | | | | than financing a used car. New cars have incentives |
| to look at your credit reports until you're ready. You | | | | and/or rebates which can lower or eliminate the |
| want to prevent an unnecessary credit inquiry. Credit | | | | down payment necessary for buying a new car. |
| inquiries may lower your FICO credit score. | | | | You just use the rebate as the down payment. So, |
| Identify Your FICO Scores | | | | when looking for a new car when you have bad |
| - In most cases, a decent interest rate on a new | | | | credit, it's often best to buy the one with the highest |
| automobile will range from 0% to 12.9%. Credit | | | | rebate possible. |
| unions and captive lenders generally have the best | | | | If the deal is structured correctly, it's possible to buy |
| interest rates. | | | | a new car with a rate as low as 0% with no money |
| - It's critical that you use a creditor that reviews your | | | | down through a mainstream lender-if you go to the |
| highest FICO score to make a lending decision. Even | | | | right dealership. Just because one auto dealership |
| though you have 3 FICO credit scores most lenders | | | | says, "No," doesn't mean you can't be approved for |
| usually use the score from only one credit bureau. | | | | a car loan at a decent rate from another dealer. |
| Ask the creditor whether they use the credit score | | | | Where to Finance a Car Loan |
| from Equifax, Experian or TransUnion. | | | | - The worst place to obtain is usually your local bank. |
| Make Your Decision Prior to Going to Car Dealership | | | | They don't have much incentive to finance you. |
| - You should be able to negotiate all specifics about | | | | - The best place is usually the car manufacturer. The |
| the loan before you step one foot on the dealership's | | | | car manufacturer has more incentive to offer you a |
| showroom floor. Have you noticed that the first thing | | | | good deal than any other lender. They also always |
| the salesman wants you to do is jump in the car and | | | | report to all three national credit bureaus. |
| take a test drive? He knows how weak you will be | | | | - Some "subprime" lenders (lenders that charge you |
| when your nostrils get a whiff of that new car smell. | | | | higher interest rates than mainstream lenders) could |
| - You can talk to car dealers to determine your | | | | be your only option if you're in a hurry. If you didn't |
| options before you make a decision to buy. Never | | | | make your auto payments on time or had a car |
| give out your Social Security number or driver's | | | | repossessed, subprime may be your only option. |
| license though. If they get that information, they'll | | | | Remember, not all subprime lenders are the same. |
| have all they need to review your FICO credit scores | | | | Some will offer you a fair deal-others will try to rip |
| and reports, which cause a credit report inquiry to | | | | you off. So make sure you interview lenders and |
| appear on your credit reports. Remember, credit | | | | compare what they offer you. |