How to Get Guaranteed Auto Financing

Guaranteed auto financing is a type of lending that makes it possible for almost anyone to borrow money to buy a car. Guaranteed financing usually requires the borrower to have a valid driver's license, a fixed address and a record of employment for a minimum period of time, and a small down payment, typically a few hundred dollars. Requirements may also include signing an agreement to have monthly payments deducted automatically from a borrower's paycheck. There are downsides to guaranteed financing, such as high interest rates on the loan, which typically affect people with bad credit scores.

Instructions

1

Bring your driver's license and proof of employment and residency to a car lot or dealership that offers guaranteed financing.

2

Review the available loan plans and decide how much you are willing to spend for a vehicle, then consider what the monthly payment would be for different loan amounts. It is important to borrow an amount you can comfortably repay on a monthly basis.
A number of factors determines the amount a car dealer will finance for a car loan, including income, credit history, additional debts and housing expenses. You can reduce the amount of the loan, your financing costs and monthly payments by making a larger down payment on the car.

3

Present your documents and driver's license to the salesperson, who will ask you to authorizer a computerized check of your credit score. Your score will determine the interest rate that the dealer will offer you for a loan.

4

Consider the terms of the loan carefully. Although financing may be guaranteed, for borrowers with a poor credit history it may come with an exorbitant interest rate, as high as 25 percent annually. With that interest rate, over the course of a four-year loan your total payback amount would be almost twice the price of the car. For example, a $5,000 guaranteed loan with a 24.99 percent interest rate for monthly payments over four years will ultimately cost about $8,000.

5

Understand the penalties for late fees, which can add to the final cost of the loan as well as harm your credit score.

6

Sign the paperwork for the loan, keeping in mind that these are legal contracts and you will be obligated to pay back the guaranteed loan at the agreed-upon terms. Auto dealers specializing in guaranteed loans can often put the buyer behind the wheel of a car he has purchased in an hour or less.