If you have a bad credit history you may wonder whether or not you will be able to qualify for a car loan. It is possible to get a loan even if you have bad credit but you will likely end up paying a much higher interest rate when purchasing the car directly from the dealer.  There are down sides to buying a car with bad credit but they can be overcome with persistence.

Car Loan Options For Buying A Car

You should first try to get a loan directly through a bank. Some banks even offer the convenience of online car loan applications. If you qualify it will give you more options when shopping for a vehicle.

If you were not able to get a bank loan then the next step would be to try to receive financing through a car dealership. There are a number of dealers who have the ability to help those buying a car with bad credit to obtain a loan.

It is unfortunate that those who are car buying with bad credit will likely end up with a sky high interest rate; but if you qualify for a high interest auto loan you may be able to refinance at a later time.

After you have made between six to twelve successful monthly loan payments you can begin shopping around for a new lender who would be willing to refinance your remaining auto loan balance at a much lower interest rate.

Since you have proven you are no longer a high risk applicant, lenders who previously denied you a car loan may now be willing to lend to you.

What to Do If Your Loan Is Denied

If your credit score is too low to receive financing through banks or car dealerships then you must work at improving your score in order to finance a car. You can begin by learning more about your previous credit history and current credit score.

How to Improve Your Credit Score

Order a copy of your credit report. It is important to see the information that is listed on your current report to find out exactly what is causing your low credit score.

Check your report history for mistakes such as false late payment reports. Dispute any inaccuracies and ask that all outdated information that is damaging your credit be removed from your file.

Everyone is entitled to receive a free credit report once a year. If you want to check your credit report more often you will have to pay a fee.

Get a Secured Credit Card To Improve Your Bad Credit

If you have bad credit or no credit then applying for a secured credit card is a great way to establish a good credit history. Secured credit card requirements vary but generally, you will need to put down at least $300 towards the security deposit.

When you use the credit card wisely and make full on time payments it will prove that you are worthy of obtaining unsecured credit. If you keep the credit card in good standing, you will get back your initial deposit in a year or two and your credit card will convert to the regular unsecured version.

Pay Your Creditors on Time

Paying your bills late or missing a payment will damage your score. Make sure you do whatever it takes to pay your bills on time. Keep track of when each bill needs to be paid and have a plan for how you will pay it. Organization and proper planning is essential to improving credit.

It could take several months, or perhaps even a couple of years to improve a credit score depending on what credit repair steps are taken, but it will be worth all of the effort to see a high credit score listed on your report.