Apply for an Auto Loan

If you're short on cash or have poor credit, that doesn't mean you can't get a car. There are multiple ways to purchase a car these days; the trick is to know what steps to take, and in what order. These 7 steps can help you get reliable transportation at an affordable payment.

Think Positive

There's a lot of misinformation out there. Instead of believing it, you need to research and find facts for yourself. So the first step is erase all your doubts and negative thinking about getting a loan. There are financial options for even the worst credit. You may pay a higher rate at first, sure, but in time your rate will drop as you responsibly make payments.

Apply for the Best

Don't sell yourself short. Just because you've had a bankruptcy or repossession doesn't mean you have to pay 30.9% for an auto loan. Apply for the best loans at the lowest rates. If you don't qualify, banks will counter with other options. If you go straight to the loan offer that has a horrible rate, you might get approved but you very well may have gotten a better rate.

Shop Around

Look for the right deal. But save yourself the hassle of kicking tires; use the Internet instead. There are several online resources for finding a good car at a good price.

Find Car-Loan Lenders

Instead of shopping for subprime loans, look to creditors that specialize in auto loans. Often these lenders make exceptions for auto loans where other lenders won't. Also, auto lenders generally will have more options for loans that will match the vehicle you want to purchase.

Use the Buddy System

Whether browsing the car lot or looking for the best rates online, have a friend or family member help you. Having someone by your side lets you talk through your thoughts and ideas so you can make a decision more comfortably. Also, having a partner to chat with will prevent you from getting caught up in any hype that an auto-dealer might try to use to get you to "sign today."

Be Practical

If you have poor credit chances are you're going to pay higher rates. Often credit advisors will tell you to hold out until you get the lowest rate. Or they might suggest that you shouldn't extend the terms of a loan just to get a lower payment. That's fine in theory. But in the real world sometimes you gotta do what you gotta do. If having transportation is the difference between being able to keep a job or not, you may want to consider extending the terms to keep your payment low. Should you go this route, however, make sure you are buying a reliable vehicle brand. Edmunds is a great resource for checking reliability of different makes and models.

Consider a Refinance

Once you get your auto loan, make payments for a year and then refinance. Often after paying on a loan for 6-12 months you can refinance at a lower rate. This, in turn, will lower your monthly payments. If you go this route, though, be careful about extending the terms again. A refinance can be helpful if a substantially lower rate will result, but don't get caught in the trap of repeatedly refinancing a vehicle only to never pay it off.

In short, there are options. The trick is to think positive and use the resources available to you. Use the web to your advantage by comparing the various offers from auto lenders and dealers who want your business. Then, when you've found a feasible option, go with it.

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