If you are buying a new car, the chances are good that you will have to finance it unless you have a large amount of money saved up, and there are several finance options available for you to choose from. These options include dealership financing, secured loans, bank loans, Personal Contact Purchase (PCP), and Hire Purchase (HP) or car lease finance. If you have good credit, then all these options are available to you, so you can take your choice and you will be able to shop around and get a good bargain on the vehicle that you purchase. But if you try to finance a car with bad credit, the state of affairs is entirely different.
Then you will find that most or all of these financing options are no longer accessible to you in your efforts to finance a car with bad credit. Probably the only choices that you will have for financial help in that case will be either dealership financing or a loan that is specifically directed at people who have bad credit. Many car dealerships are willing to finance buyers who have damaged credit or possibly leasing with bad credit. The problem with that for the buyer is that the annual percentage rate charged by these dealerships is usually exorbitant so the payments will be very large. In addition to that drawback, you will also have a very small number of vehicles to choose from, since you will be limited to the vehicles finance that the dealership financing you has to offer.
If you don’t want dealership financing for either of those reasons and you cant get a no money down car loan, another option that is open to you to finance a car with bad credit is to seek out a lender that will make loans to people with bad credit. Obtaining financing through an outside lender has a couple of advantages over getting financing from a dealer. In the first place, the annual percentage rate may be much lower that the rate the dealer offers, so your payments for the vehicle will be less. In the second place, by getting a loan from an outside lender, you will be able to buy your vehicle from any dealership that you choose, so you will have a large selection of vehicles from which to choose.