Seven Steps to Getting a Car Loan with Bad Credit

Poor credit doesn’t mean you can’t buy a car and it doesn’t automatically mean you can’t get a car loan with terms that don’t break your monthly budget.

Remember to shop around. While lenders will typically charge higher interest rates to those with less than perfect credit, you don’t want to take the first rate you’re offered.

Here are seven strategies to help you find an auto loan:

1. Don’t assume the worst

Don’t take someone else’s word that your credit is bad. Check by getting your credit report and credit score. Even two candidates with an identical score might not be the same in the eyes of a lender. Even with a tarnished score, it might be better than someone with the same score, but no credit history.


2. Aim high

Due to the shorter terms and less money involved – a car loan is easier to be approved for than say, a home loan. See what you can afford.


3. Shop around

Some lenders will see your tarnished history in a more positive light than others, so it’s critical to shop around for the best rate. But be careful when dealing with a lender or car lot that specifically caters to credit crunched consumers.


4. Start close to home

Even if you don’t think you can get a loan, stop by your local Travis Credit Union branch first. Apply where you have a checking account and see if your employer or insurance company offers auto financing.


5. Don’t go it alone

Ask a friend or relative to go with you. Not only does it help to have another set of eyes and ears, but you can give your partner a role to play – such as acting unimpressed, dubious or critical of the loan terms.


6. Shop loan terms, not monthly payments

Look for the cheapest money – the lowest annual percentage rate over the shortest period. Don’t be sidetracked by promises of a lower monthly payment over a longer period of time.


7. Look out for add-ons

Sometimes nonprime buyers are likely to encounter lending contracts stuffed with nonessential good and services. Never allow the loan to be contingent on purchasing any add-on, such as extended warranties, after-market services and even insurance.


Shop smart for your next auto

Travis Credit Union offers a great deal of auto loan terms and rates. For more information please contact your local branch or call Member Service Center at (800) 877-8328.

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