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Obtaining a Car Loan When You Have Bad Credit

By Raymond Ezilon.com articles Published 10/14/2008 | Loans

Unfortunately, if you have bad credit, it will be difficult to obtain a car loan, let alone one at a reasonable interest rate.   As may be expected, the best thing you can do is look for ways to avoid owning a car altogether.  Chances are, if you give a little bit of thought to the matter, you will find a number of lifestyle adjustments that will make it possible.  On the other hand, if you are determined to get a car loan, there are some things you can do mitigate the financial disaster that may well result. 

Even though you may not be in the market for other types of loans, you may want to compare interest rates.  As an example, if you own a home or a boat, you may be able to secure a low interest loan and use them as collateral.  In some cases, you will find that the interest rate is lower, and you will also have a longer amount of time to pay the loan back.  At the same time, if you pay off these loans earlier than expected, it will enhance your credit rating, as well as reduce your interest burden.  That said, before you risk losing  your home, it is better to simply refrain from buying another car.

When searching for a car loan, it is best to do your research carefully.  In some cases, you will be able to locate auto dealers that are running sales, or looking to liquidate their stock as quickly as possible.  Without a question, if you can hold off on purchasing a car until the end of the year, you may be able to capitalize on a number of incentives.  

Aside from this, you may want to take steps to improve  your credit rating. This process will begin with obtaining a copy of your credit report from the three main credit bureaus.  If you request these reports by mail, you can obtain one free copy each year.  In some cases, simply correcting mistakes on your credit report will improve your score.  You may also want to do some research on credit repair strategies to increase your rating.  Ideally, you should do all of this before you approach a bank or other type of lender.

Today, it is difficult to face the fact that affording a car may be beyond your budget.  Without a question, taking on any type of car loan is an indicator that you are having serious financial problems.  That said, if you are determined to own a car at the expense of your future security, you can at least look for the lowest interest rates possible.  This will include looking for dealer incentives as well as finding ways to repair your bad credit.