Bad Credit Car Loan - Your Auto Loan Options

Today many Americans have had trouble keeping abreast of their credit. You only have to miss one or two payments and this will affect your credit scoring and you are regarded as a bad credit risk. Once you get a bad credit rating it can take quite a while for you to get it back again -- this is not something you can hide as each time you apply for credit.

If you want to buy a new car for example, the lender will take the information you give them and submit your name to the credit reference agencies who will give back a report on what sort of borrower you are. You can get a copy of your report from the credit bureaus and although you can't change it you are allowed to make a note of extenuating circumstances, illness for example, regarding missed payments.

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It is possible to get a bad credit car loan but it's always best to shop around. When you have bad credit then you probably won't be entitled to special offer deals where you don't pay for so long, or the interest payments are very low and there is no deposit. If the car dealer has done a credit search and found that you have bad credit then he or she can either refuse you outright or they can offer you one of two loan options, one secured and one unsecured.

With a secured loan you have to have something that you can use as collateral, be careful with this because if you default on the car loan then the car dealer can take whatever you offer as collateral or security as payment. A secured bad credit auto loan may have a lower interest rate than an unsecured one because of the collateral.

An unsecured car loan means that there is nothing to guarantee repayment of the loan so you would probably pay a very high interest rate on most unsecured bad credit car loans. In addition to these two methods, some dealers will grant you a car loan on payment of a heavy deposit, at least twenty five percent of the purchase prices in some cases. You would also have to make a down payment with both secured and unsecured loans.

Whether you have a secured or unsecured bad credit car loan, the loan could take between five and seven years to repay, if in the meantime, you manage to improve your credit rating by paying off some debts then you could ask for your interest rate to be lowered.

Certainly there are more car firms, both on and offline who are now offering car loans to people with bad credit. If you do get a bad credit car or auto loan then you might need to lower your expectations about the kind of car you may be able to afford, both in terms of the repayments and of any down payment or deposit. It is well worth looking online as some sites give would be buyers a number of options from different companies -- this is one way of helping you get the best bad credit auto loan that you can.

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