Looking for a car when you have bad credit can be a stressful experience. You're probably worrying about a number of things: will a lender approve your loan? Can you get what you want? What is the interest rate going to be?

Types of Bad Credit

Bad Credit and High Interest RatesDid you know that the type of bad credit you have could affect your interest rate? There are two types of bad credit: situational and habitual.

If there were outside factors that led to your bad credit, such as a job loss, injury, divorce, or a business-related bankruptcy, and you were handling your finances responsibly up to that point, this is what's referred to as "situational" bad credit. It’s also the best position to be in if you need special financing. In this instance, you have a very good chance of getting approved for a car loan, although the interest rate may be higher because of your recent credit issues.

However, if you have "habitual" bad credita background that includes issues like multiple bankruptcies, consistent late payments on loans, credit cards, and utilities, or a repossession(s) that can't be associated with a bankruptcy – you may have to face the fact that much higher interest rates are something you have to deal with until you build a better credit history.

In both scenarios, especially the first, you may still have the opportunity to get approved for an auto loan. You just need to find the right dealership that's signed up with the right type of lenders that are able to meet your needs.

How Can I Get a Lower Interest Rate on a Car Loan?

When you have bad credit, qualifying for a lower interest rate can be difficult, but there are ways to lower it or reduce the amount of interest charges you end up paying, including:

  • Having a cosigner – By having a cosigner with a good credit score, you open up the opportunity of qualifying for a lower interest rate.
  • Making a bigger down payment – The more money you put down, the less you have to pay in interest charges over the course of the loan.
  • Negotiating the vehicle price – You can negotiate the price of the car, which makes the loan smaller and helps you pay less in interest charges in the long run.
  • Refinancing – If you can’t avoid a high interest rate, you may be able to refinance once your credit score improves (usually after two or three years of on-time loan payments) and qualify for a lower rate.

Get to the Dealer that Can Help You

Most traditional lenders look only at the numbers, so getting the best deal possible when you have damaged credit can be difficult when you don't know where to go. Auto Credit Express has a trusted network of dealers that are experts at handling car buyers with varying degrees of credit. All you need to do to get matched with a dealership near you is complete our fast and straightforward auto loan request form to get started.

Once we have your information, we’ll contact you to set up a meeting with a dealership that’s suited to help. Don't let your concerns about getting approved slow you down. Get back in the game today.