Auto loans for people with bad credit do exist because people with bad credit do still pay their loans every single day.  The default rate is higher statistically, but with the margin on the car the company is selling and the increased interest rate you’re forced to pay because of your bad credit the finance companies (especially if funded by the car company themselves) still make their money.  If there is money to be made someone will make the loan.

Best Auto Loans for Bad Credit

The best auto loan for bad credit is the asset backed auto loan.  Essentially by owning something of value you tell a lender that “I have the ability to save things worth value and earn money to buy things of value.”  This gives the company a warm fuzzy feeling about loaning to you, plus they can take your stuff if you quit paying.  These asset backed loans will almost always offer the lowest interest rate.  I know some of you are saying that car loans are asset backed loans.  Well cars make lousy assets because they are always devaluing.  Time and use both degrade the value of a car so a portion of an auto loan is always considered unsecured.  Unsecured equals extra risk for a lender.  Therefore by offering something else of value in addition to the car the bank can sell both your car and your asset to recoup their costs if you default.  These assets can be anything from stocks, retirement accounts, gold, jewelry, other paid off cars, your business, and collectibles, and just about anything you could sell on eBay.

Auto Loans for Really Bad Credit

The auto loan for people with bad credit, really awful, down low credit is the dealer financed loan.  If you have a high income with lousy credit or just talk to the owner of a used car lot long enough that they just really want to sell you the car it is possible to get the dealer themselves to finance the car for you.  I warn you the rate is going to be terrible.  However, you will be able to drive a car away that day.  You need to dress cleanly, bring your pay-stub in and any other contracts for side work you are doing, be courteous and inquisitive, and take up a ton of the salesman’s time asking questions and having them show you every car on the lot.  For some reason salesman (or small lot owners) hate to give up a lot of time without a sale.  They will give you auto loans for bad credit just so they can make the sale and call it a win.