As many as 25% of American adults can’t qualify for a regular car loan. That means that those of you who struggle with bad credit aren’t alone and it also means that there are a lot of options for you. However, these loans aren’t like regular loans. Auto loans for bad credit are structured differently to protect the people that are actually lending the money.

For example, 100% financing isn’t going to be an option if you have bad credit. In most cases, you will be expected to come up with a down payment for at least 20% of the value of the car. This protects that bank/lender and provides them with an easy out if you default on your loan.

Another aspect of using a car loan with bad credit is that the interest rate won’t be the same. Right now people with prime credit can get car loans at around 7% interest. You should expect to pay a lot more if you’re going to use a bad credit loan. Most of the time you’ll be paying between 10-15%, depending on your credit and how much you’re willing to put down on the loan.

Additionally, you can expect a shorter term on your loan. Prime borrowers can generally do five to seven year loans and those with bad credit will generally only be able to do three year loans. This means that you can expect higher payments but will also finish the term of the loan more quickly. Of course, if you have prime credit you can naturally opt for a three year loan.

What To Watch Out For With Bad Credit Car Loans

There are a lot of shady techniques that bad credit car dealers will try to use to get your money. The biggest tactic they’ll use is that they sometimes inflate the price of the car. You can save yourself a lot of expense by researching the value of the vehicle on your own. Kelley Blue Book is an online resource that you can use for free to find the estimated value of a vehicle. This can protect you from overpaying a shady dealer.

You should also be careful with the financing aspect of this business. You shouldn’t be paying 25% interest for bad credit used car loans no matter what you’re credit looks like. Between raising the price of the vehicle and charging ridiculous interest rates, some dealers are able to get thousands of extra dollars out of your pocket.

It might not seem like it, but you actually have more options than you think, even if you have bad credit. There are plenty of online lenders that specialize in this type of lending, you simply have to take the time to find them.

Almost everyone needs a car, especially if they don’t live in a major metropolitan area. However, life gets very tricky if you’re a person that has bad credit. I have two years experience in the loan industry and can tell you that some companies make your life extremely difficult if you haven’t taken care of your FICO score.

If you don’t have a car, it’s hard to get to work and if you can’t get to work, it’s hard to pay the bills. This is a hard situation but there are answers if you’re willing to learn everything you can and sacrifice. I have personally been through this situation and now that I work in the loan industry I can tell you how to overcome this obstacle.

The first thing you’re going to need to do is make sure that you have a job. That might mean riding the bus to work for a few weeks while you prepare to get your car loan. I personally had some friends who were awesome – they took me to work while I was preparing to get my loan. Riding the bus obviously takes a lot longer but if it’s the only way, it’s the only way.

With No Job, There’s No Loan

Again, I work in the loan industry and can tell you – there’s no loan with no job. There are companies that will work with you even if you’ve only been employed for a few weeks but if you don’t have a job at all, you can forget about it.

After you have a job you have a lot of options that you wouldn’t have otherwise. There are plenty of dealerships who provide car loans for people with bad credit. You generally will have to have a down payment to qualify but the amount usually isn’t that large.

I would recommend starting off small because these loans are somewhat expensive. The interest rate on my first car loan was almost 9% and I’ve heard of loans that cost upwards of 15%. That’s a lot for a loan so make sure that the amount is quite small. You should probably only spend $2,000 or so if you’re in this situation.

Finding Car Loans With Bad Credit

Pay attention to ads on the radio in your area. Dealerships who offer this type of loan generally advertise locally via television and radio. Banks are generally useless for bad credit loans of this type and tend to make you feel really stupid after they deny you.

You can also pay attention to billboards as you drive around town. These might sounds like dumb ideas but honestly you’ll thank me once you find a local dealership. After I started working with loans I realized how many companies there are out there that help people in your situation. I personally can do nothing for a person that has bad credit but there are a lot of companies that can really help. In my experience most of them are small dealerships that do their own loans.

Bad Credit Car Loans Are Only A Temporary Fix

Getting loans of this type can only take you so far. If you really want to improve your financial situation you need to fix your credit. This can be done in as little as a few months and if you take the time to improve, you’ll be glad you did. That way in the future, when you’re sitting down in front of a person like me, I’ll be able to approve your application and reward you with an awesome interest rate. I can’t tell you how many times people have thought that I had the power to push their application through when I couldn’t do anything for them. Lenders don’t want to provide loans to people with bad credit.