By Kenneth Long on July 18, 2011
.jpg.aspx?width=75&height=75) You desperately need to buy a car but you have been turned down by lenders. Do you know how to get a car loan with damaged credit?
For starters, you will need to find out why your loan was denied. The easiest way is to simply ask the lender or the finance manager who delivered the bad news to you.
This used to be private information they did not have to share with you. Thanks to changes brought by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fair Credit Reporting Act now includes a requirement for disclosure by the lender to any applicant who is either denied a loan or is charged a higher rate than the lender's best customers.
This means that they must do one of two things. They can tell you the reason that your loan was denied. Alternately, they may simply provide you with a credit report and score so that you can find out for yourself.
The next step is simple credit repair. This is not where you hire some scam artist that advertises credit repair services on the street corner. Instead, you simply dispute the errors on your credit reports.
Finally, make sure that you are applying with the right lenders. Unless you have a high credit score, don't even bother trying to get that 0% loan offered by the manufacturer on a new car. Instead, many credit unions will give you a great rate as long as you have at least a 630-650 credit score. Each credit union has different criteria and their own set of membership requirements, so it helps to shop around.
Resist the urge of borrowing from consumer finance companies unless you have exhausted all other options. Of course, even a high interest consumer finance loan is better than going to a "buy here, pay here" dealer. Those crooks are just waiting to pounce on you and take advantage of your desperation.
If you feel like you have no good options, your best option may be to either wait until later to buy, take public transporation or simply pay cash for a cheap car that still runs. Otherwise, getting a bad loan will only lead to worse financial problems down the road.
Either way, at least now you are armed with the reason for your denial. That can help you determine whether you need to address one or more of your negative accounts. Resolving some debts could increase your scores enough to help you get approved for your next car loan.
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