Getting Car Loans With Poor Credit History

It's an unfortunate truth of the current situation that you need a car. There are some areas in which public transit has managed to flourish, at least a bit, yet even in those large cities, it can be difficult to get to the outskirts without a car. And if you live in a suburban area, there's simply no help for it. You need a car to get anywhere.

If you have a poor credit history, for whatever reason, it can be incredibly difficult to get a loan for a car. Perhaps you're lucky enough that you can pay for a car out of pocket, but the chances are that if you have a poor credit history, you don't have that much money. Many people simply give up, and decide that they can't get a car at all.

This is not the case! There are a few things you can do if you need a car loan when you have a poor credit history. They're not exactly easy, but if you're dedicated, you'll find that some avenues open up to you.

Secured Loans

Many people with poor credit get turned down for a loan, but what they get turned down for is an unsecured loan. However, it's possible that you can get a loan if you decide to go with a secured loan, instead.

A secured loan is a loan which is given when the borrower pledges a piece of property for collateral. In many cases, the car itself may be a good piece of assets to put up as collateral. This means that if you don't manage to pay back the loan, the bank can take ownership of the car. The bank can then sell the car for a fair market price, and use that to pay back the loan.

While many banks might not give out an unsecured loan, they might be willing to give out a secured loan. It depends on precisely how bad your credit is.

Get A Co-Signer

While some banks will deny a loan if you have bad credit, many other banks will allow a loan if you have someone to co-sign. The concept of a co-signer is that if you fail to pay back the loan, for whatever reason, the bank can talk to the co-signer and get their money back that way.

Essentially, it's someone agreeing that they trust you enough to be willing to pay back the loan themselves should you be unable to pay it back. Be careful with this option, however. Should the co-signer be unable to pay back the loan, they'll face the same consequences you would face. Their credit will be harmed, and they may have problems getting a loan of their own in the future.

Borrow From Family

No one likes to go to a family with their hat in their hand. The idea of having to ask a relative for a bit of help when you need it can feel humiliating. This is especially true if you've had difficult times with family in the past.

However, the simple fact remains that it's hard to have a life without a car. Your family no doubt wants you to do well for yourself. So it's entirely possible that your family may be willing to loan you the money. Make certain to offer a payment schedule, and you can also help calm their fears by signing a contract to promise you'll pay them back.

At the end of the day, getting car loans with bad credit is difficult. But it's not impossible. If you're dedicated, you can manage it.