Even if you have bad credit or no credit rating at all, you can still get a car loan. Moreover, car loans are a good way to build credit, so once you obtain one, making the payments on time can repair your credit rating while getting the right car for you.
There are, however, some caveats to a bad credit auto loan. Generally, lenders will want to see that you're employed in a well-paying job, and the longer you've been there, the better. The reasoning is that you can afford the payments and that you are likely to have a steady income now and in the future. Furthermore longer employment shows you're responsible and are likely to make timely payments. If these conditions apply, chances are you could qualify for a loan even if you just finished bankruptcy proceedings last week.
You should be aware, though, that the kind of deal you will be able to get will not be the same as someone with a good credit rating. The loan will likely have three restrictions on it making it a little less than ideal loan, but again, the aim is to re-establish and rebuild your finances. First, the loan will have higher interest than normal - sometimes quite a bit higher - depending on your circumstances. Secondly, a limit will be imposed on how much you can borrow. Thirdly, the repayment period is likely to be shorter-term, say somewhere between 2 to 5 years, and negotiating the option of repayment holidays into the loan is unlikely.
If these conditions seem unfair, there are things you can do to get a better deal. If you can wait a while before applying for a car loan, it may mean you can save some money for an initial down payment on the loan. You could also take some time to reduce your existing interest-bearing debt, like credit cards, as much as you can beforehand. These measures are likely to result in more favourable conditions, such as a longer repayment period or lower interest rate.
When you go to get your bad credit loan, though, be aware that there are fraudulent companies who are looking to take advantage of people with bad credit. Some cynics feel that certain lenders target people who are unlikely to repay debts, thus creating an interest-bearing income that is then sold onto debt collection agencies.
Therefore, be careful when you're looking for a bad credit car loan or even a debt consolidation loan, and hopefully you will find the right deal for you.
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