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## Bad Credit Auto Loans – Enjoy Better Rates Even With Poor Credit History

Don’t believe when someone says that the best car loan rates are only available to people with good credit. It’s not true. Anyone can enjoy low interest rates if they minimize the risks. This means you can enjoy affordable car finance even if you have a bad credit score.

**Prepare for the Car Loan Process**

The car loan process is often long and complicated. But, you can make it easier by organizing it.

Prepare a budget so you know how much you can spend on the car. Calculate all your monthly income and expenses and decide how much monthly payment you can afford. Don’t forget to consider the costs associated with the car such as registration fees, taxes, insurance, maintenance, etc. It will help you in making the right decision. This step is very important for people with bad credit because any wrong decision can further deteriorate your score.

Also, you should order your free credit report and check for any errors. It is a known fact that the credit bureaus will reject the transaction. So, check the report carefully. If possible, pay off a few debts to improve your credit score.

**Used cars can be useful**

Used cars are less expensive. That’s why; The cost of a car loan is generally lower compared to new cars. This situation is suitable for bad credit borrowers because a small car loan is more manageable than a large loan. So, choose a used car. But, don’t compromise on the quality of the car. The vehicle should always be reliable because you don’t want to waste your money on a lemon or junk.

**Finding a Primary Lender**

Do not apply to your local lender/dealer. Instead, take some time to research. Apply only to bad car loan lenders. Most microlenders work with borrowers with credit issues. So, contact sub-prime lenders and apply with them.

**How To Get The Best Rates?**

Don’t assume that a bad credit score is the only factor responsible for approval. You can enjoy better prices by considering other factors.

__Proof of Income__

When lenders see your average income, they will consider you a less risky borrower. For this purpose, use your pay and/or income tax statements.

__The co-signer__

As your co-signer reduces credit risk, the borrower’s confidence in you increases.

__Put money down__

A low down payment can work for someone with bad credit. As you put money down, the car loan is reduced. This means that the total value of your loan decreases.

__Trade in__

If you have an old car, you can trade it in. It will lower the amount of car finance. Also, it is useful for those people who find it difficult to pay.

**Applying for a Payday Loan Does Not Lower Your Credit Score**

People with bad credit are often afraid to apply for a bad credit loan. They think that inquiries on their credit score will make it worse. But, the reality is different.

Fair Isaac Corporation, the company that manages the FICO score has announced that all inquiries made within 30 days of purchasing a car loan will not affect your credit score. Now, the number of days can be reduced to 14 if the lender uses previous versions of the FICO score and increased to 45 if using the latest formula.

This means that there will be no reduction in your credit score if you apply for a car loan with bad credit. So, get out there and apply for auto financing without any worries.

I hope you will soon find the best car loan rates and buy the car of your dreams!

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