If you have a low credit score, opening a new credit account and maintaining a good payment history can help boost your rating. Bad credit has several consequences. Those with a negative rating may have trouble getting approved for a credit card. Moreover, bad credit validates higher rates on auto and home loans. Because auto loans can quickly raise credit scores, a bad credit auto loan can be beneficial.

What Causes Bad Credit?

Credit histories are determined by how well we maintain our credit accounts. If you pay bills on time and never miss a payment, you likely have a high credit rating. On the other hand, paying creditors late, bankruptcies, foreclosures, and repossessions will result in a lower credit rating.

Bad credit is not permanent. In fact, it is realistic to improve credit rating within twelve months. After a bankruptcy, it is suggested that persons immediately apply for new credit. This usually entails applying for a secured line of credit.

How to Get an Auto Loan after Bankruptcy

Getting approved for an auto loan with a subprime lender is very possible following a bankruptcy. Auto loans are secured, thus lenders are more apt to offer money to individuals with a low credit rating. Worst-case scenario, the lender simply reclaims the vehicle and re-sells it to recoup their loss.

With an auto loan, the ultimate goal should be to raise a low credit score. Hence, it is important to maintain regular payments. Besides, an improved credit score will make it possible to refinance for a low rate.

Tips for Getting Approved

When searching for an auto loan lender, ask for quotes from multiple lenders. If possible, submit a quote request through an online auto loan broker. Brokers work with numerous lenders, and are capable of finding the best financing package for your circumstances.

Try using one of ABC Loan Guide's Recommended Bad Credit Auto Loan Companies.

To improve approval odds and chances of getting a reasonable rate, apply with a down payment or co-signer. On average, down payments are about 10%. However, higher amounts may knock a few extra points off the interest rate. If using a co-borrower, select a person with a high credit rating.

View our recommended lenders for Buying a Car With Bad Credit online. Also, view our recommended sources for a Free Instant Credit Report.