How to Get a Bad Credit Auto Loan With No Dealer Contact

Getting an auto loan with bad credit and no help from the dealer will be challenging--but not impossible. Dealers can be a big help because they generally know all the auto lending sources in town, including lenders comfortable with bad credit borrowers. You have the right to find financing on your own, but be prepared to spend considerable time calling around as you look for finance companies willing to give you a loan.

Instructions

1

Get a free copy of your credit report from Annual Credit Report, a website operated by the three nationwide credit bureaus--Experian, Equifax and TransUnion. The credit bureaus created the website to offer free credit reports as required by the Fair Credit Reporting Act. You can view and print your report online or follow instructions on the homepage to order by telephone or mail. The report will include instructions for ordering your credit score separately. Get your score as well.

2

Compare your credit with the scores of others who have shopped for car loans. Your chances of being approved through a bank or credit union are slim if your credit score is below 620. According to Microsoft Money, only 1 of 10 borrowers with a score of 620 or below was approved for a car loan in April 2010. On the other hand, 8 of 10 borrowers with scores between 620 and 749 were approved.

3

Improve your credit score as much as possible by bringing all your accounts current and paying off negative items on your credit report such as charge-offs and collection items. Charge-offs are accounts that were closed by your creditor after you defaulted on the account. Collection items are charged-off accounts that were sold to debt collectors.

4

Save as much money as possible for a down payment. The larger your down payment, the better your chances for a loan, no matter what your credit score is.

5

Apply for a loan at your bank or credit union, but see a loan officer first. Tell her about your credit, including your score. Point out that you are willing to make a significant down payment. Fill out the paperwork and wait for a decision that could come within one business day,

6

Call the loan officer if you are turned down for credit. Ask her to refer you to finance companies or other lenders in your community who specialize in bad-credit auto loans. For other referrals contact a nonprofit credit counseling agency, including those affiliated with Consumer Credit Counseling Service. Find the agencies by seeking referrals from community organizations such as The United Way or Urban League.

7

Apply for car loan from a finance company. Keep applying to different companies until you are approved.