Up to 16 percent of Americans currently have bad to fairly bad credit, which is about 108 million people with a FICO score of 300-579. 

In addition, no credit at all can reflect badly on your ability to make payments. 

But as Yahoo News states, many people feel stuck in a catch-22 when it comes to improving their credit

But there are steps to take to return to a healthy above-670 credit score. 

In this article, we will share some ideas on how to get a car loan even if your credit score is lacking.

Check (and Improve!) Your Credit Score

It’s important to know your credit score first before you decide the next step. If you have low credit, it’s not the same thing as repairing a number of debits.

Taking proactive measures to make sure your bills are paid on time, and reducing your debt through utility ratio, can help you improve your credit score even if you have debts.

Get familiar with how much you can personally afford and work on acquiring enough capital for a down payment.

When researching how much you need to pay for your car, keep in mind how much you’ll need to spend on a down payment and how much your monthly car payments will be. 

Keeping in mind extra expenditures like your initial loan payments, insurance, price of gas and general upkeep and maintenance, will help you keep your bottom line in check and your finances healthy. 

If you have no credit, you may be able to open a new student credit card with limited credit until your score improves.

Try Using an Online Lending Network

With lending networks, a single loan application is sent to multiple network lending partners. 

This can be ideal for people who don’t want to spend all of their time shopping for a loan when they can just fill out one application that can be seen by multiple lenders. 

This method saves time and energy on behalf of the loanee and the loaner in getting the best deal on both sides. 

One of the best things to do is to research some of the easiest auto loans to get, which may have low interest rates. Some companies do work with consumers who have bad credit, no credit, or even repossession and bankruptcy. 

Get Pre-Approved for a Car Loan

The pre-approval process for a lending company is when they find out how much they can loan to you based on your finances. This should give you a bigger picture of what you can afford. 

The lending company will type up a letter of approval for you and with that letter you’ll better be able to figure out which car loan would work best for you. It will also help you to negotiate a good purchase price at the dealership.

Don’t Say Yes to the First Loan You Find – Shop Around!

It’s important to keep your mind and options open when it comes to finding a car loan. 

You shouldn’t just sign with the first loan that appeals to you, as there may be other car loans with better interest rates or payment plans that would work better for you. 

Make sure to have a list of car loan options to choose from, and choose which one sounds best after thorough research.

Explore Offsite Options Too

Offline, there are many places you can approach in real life to get a car loan. You can go straight to the manufacturer and apply for captive financing for a new vehicle. 

You can also go to a local dealership and get dealer-arranged financing, which is where the dealer works with multiple lenders to locate and obtain a loan for your chosen vehicle. 

You can also go through a bank or local credit union, which may have options for auto financing for loans that can be paid back to the financial institution on a monthly basis. 

You might also be interested in checking out “buy here, pay here” dealerships, which specialize in customers with bad or no credit by financing the purchase of the vehicles on the lot themselves. 

Bring in a Co-Signer

Another option for you to consider is bringing in a co-signer with better credit. This person (perhaps a friend or family member) can vouch for you and get you access to a lower down payment. 

Be Flexible

Finally, try to stay flexible when looking around. You may be able to choose an older model used car for a more favorable contract, as well as increase your down payment to minimize your monthly payments.

Remember the need for car insurance and consider ways to keep your rates down, as we discussed in a previous article. 

It can be hard finding a car loan with bad credit, but if you follow these steps you might find the car loan and payment situation that works best for you.