You Can Get A Bad Credit Auto Loan, But What Then? Know Your Stuff Before You Start Shopping!

You need a bad credit auto loan. Here's your options:

Go from dealership to dealership hoping for the best, usually settling on whatever vehicle they push you into?

OR get pre-approved and walk onto the car lot empowered and ready to do business on the vehicle of YOUR choice?

Obviously getting pre-approved is the best way to go! Bad credit auto loans are available through some very good lenders.

FACT: If you need a bad credit auto loan then getting pre-approved can save you an average 2% - 5% AND thousands of dollars in payments!

A Pre-Approved Bad Credit Car Loan Puts You In the Drivers Seat!

A pre-approved auto loan from a lender who specializes in bad credit auto loans, might save you between 2% and 5% (I know this because I used to sell cars in Phoenix Arizona).

Regardless of your credit score, being pre-approved for an auto loan gives you more options when you walk onto the car lot. Once you're approved for a car loan you are in the drivers seat! You are free to shop for the BEST vehicle in your price range!

Before you start shopping for loans though. Here's some helpful advice.

Know Your Credit History

Rates and terms will vary depending on your credit scores. This can mean the difference between a new vehicle or a used one; a vehicle with a lot of equipment or one that's a little scaled back. Before you assume you need to deal with a creditor who specializes in bad credit, check your credit score.

Leave Room For Warranties and GAP

With all the computer equipment on cars nowadays what used to be a simple fix is now very complex. The average mechanic bill on a vehicle today can be over $400. And that's for something simple like a window motor! So negotiate a warranty into your purchase!

GAP insurance pays off the difference between what you owe on the vehicle and what the insurance company gives you if your car is totaled. This is a must have for any financed vehicle today!

Most bad credit auto loan lenders will give you "room" to put in these items. For instance, if they approve you for $10,000 they will really give you about $13,000 (as long as you are covering tax, title and fees and/or purchasing an extended warranty or GAP).

HOWEVER, each lender is different so you'll want to ask if they are allowing for this kind of bump up before you start shopping. If they won't then you will need to shop for a vehicle that is about $2,000 to $3,000 less than your approved-for amount so that you can purchase an extended warranty and GAP insurance.

Take Your Time And Find The Vehicle YOU Want At A Reasonable Price

Just because you have bad credit doesn't mean you should be forced to buy the worst vehicle on the lot! If you're shopping for a used vehicle ask them for a Car Fax report. If they won't give you one then don't buy the car. Always be an informed buyer!

Don't shop for more vehicle than you're approved for and think you're going to negotiate it down to your pre-approved amount! The best way to know a good value on a used vehicle is to ask for a Kelly Blue Book sheet. A good price should fall between wholesale and retail price. Don't let the lender sell you a vehicle for more than it's real value! Make a reasonable offer of between wholesale/retail value and if they won't do it then move on. Also, if they won't share Kelly Blue Book information with you then leave and go somewhere else. That's the power of pre-approval!

Another great feature to pre-approval is that the bad credit auto loan lender won't let you have a car that falls outside the Kelley Blue Book "book value." So if a dealer is trying to hustle you once he finds out you're pre-approved (and won't let him pull your credit to get you a loan himself), he'll help you to find a vehicle that is safe, reliable, and not an overpriced rip-off!

Know Your Trade-In Value

Most bad credit auto loan banks will give you an estimate on what you're vehicle is worth as a trade-in. Also you can check it out for yourself on http://kbb.com. But remember, Kelly Blue Book is just a tool. Car dealerships also look at auction reports to see what your vehicle is selling for on the open market in your area. Don't let the dealership trick you into a low trade-in value, but don't ask for the max either. Kelly Blue Book fair trade value is a fair price. If you can get more from a local source then by all means, go that route. But if trade value ranges fro $4,000 to $8,000 don't ask for $8,000 (unless your car is a museum piece that's never been driven it's probably not worth the max amount).

So, if you're ready to get shopping get yourself pre-approved for that car loan and have fun shopping like a pro! Good luck and good shopping!