If you need a car and your credit is bad, you can still finance your purchase with a bad credit car loan.
These days it's almost impossible not to see an ad on TV for an automotive dealer that offers 'financing regardless of credit'.
These commercials are referring to a bad credit car loan.
Although advertised heavily by car dealers, you do not have to get a bad credit car loan from a car dealer in order to purchase a car.
Since the automobile is the collateral for the bad credit car loan, many institutions are willing to offer them as financing solutions for their clients.
The interest rate you would be charged on a bad credit car loan will depend on the status of your credit as well as the competitiveness of the financial institution.
If your credit is extremely poor, you could expect to pay an interest rate in the low-to-mid teens.
The interest rate you would be charged on a bad credit car loan will also depend on the age of the car to be financed as well
as the length of the loan term. The interest rate will be higher on older cars and for loans with longer terms.
If you get a bad credit car loan and are trying to keep your monthly payments as low as possible, you may want to consider
extending the term of the loan (i.e. from 36 to 48 months). When getting a bad credit car loan, it is advised not to seek out an
extremely long loan term (i.e. 72 months). By getting a bad credit car loan for extended periods of time, you run the risk of getting
'upside-down' on the car loan -- meaning you owe more than the car is worth. This means that if you wanted to sell the car several years from now,
you would end up having to pay money just to get rid of it. If you are considering extending the term on your bad credit car loan
past 60 months, you should instead consider finding a cheaper car to purchase.