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Auto Loan for people with bad credit

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Although an auto loan is a way to rebuild credit, I see no point in getting yourself in over your head (again) with a sky-high interest rate. (Been there, done that...although I had sufficient income to cover it, it was a hugely bad "investment" other than the fact that it helped rebuild my credit).

Companies like roadloans.com and Americredit will finance people with subpar credit - but often at 15-20% interest rates (or worse)!!!!! Shop around; see if you can get a rate not more than a few points above the rate for A+ borrowers. Do you belong to a CU? Try them first.

You will get at least one reply here that you should not finance an auto at all (and maybe you shouldn't), but rather save a couple hundred dollars and buy yourself some kind of used clunker or even a bicycle. But that may be unrealistic for you. I think that's terrible advice for anyone who has a long or difficult commute to work. You could be creating worse problems for yourself than a high-interest loan.

Whatever you do, go into your car-buying purchase with a realistic budget. If you have to finance at a higher interest rate than you'd like, buy the cheapest car you can find with the fewest bells and whistles (even basic cars come with quite a bit now...I rented a Chevy Cobalt on a recent business trip and it even had an outside thermometer). Consider the longterm costs of your car, including gas, maintenance, and insurance. I'm sounding like my dad now.

Can you put off your car purchase? What is your current situation? If you just want and don't need a car, then forget it and focus on your rebuilding efforts. If you absolutely need one, and get a rate you're not happy with, continue working like crazy on your credit, keep your utilization low, and refinance in six months to a year.

:goodluck: -- and proceed with caution.

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Leslie gives great advice here and I have to agree 100% with her.

99.9% of those "Auto Loans for People with Bad Credit" should be renamed "Auto Loans for Complete Suckers who are Desperate". Aside from the fact that sub-prime auto lenders are currently charging interest rates in excess of 25% depending on how terrible your credit is, chances are you'll end up in a repo.


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  • 1 month later...

I have a question. I understand that auto loans for people with bad credit are the worst. But what loan options does a person have when they don't have any money saved, and don't have a means to transportation.

I recently had my beloved Honda Accord break down. Yes, she's 100 years old so I wasn't that shocked. But now I have no way to get around without wasting $$ renting a car. I've applied with all the snake lenders and was still declined. I would go the "buy here pay here" route but I don't have an extra $2000 laying around for a DP.

I've been working on my credit since Jan, and I seen great improvement as far as getting baddies removed and paid but evidently that's not enough. B/c now my problem is that I don't have sufficient comparable high credit or

insufficient amount of tradelines.

I am truly frustrated... Any advice would be appreciated.

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