Having bad credit can prevent you from getting the loan necessary to buy a car. Of course you can always pay cash for a car. However, chances are that you, along with most people, do not have enough cash in hand to pay for a car at one time. As such, a loan is necessary for you to purchase the car you need to get to work, go to the grocery store, or for whatever necessary task or purpose that you need to complete in order to survive.
Bad credit can hurt your chances of getting a loan, but there are many car dealerships that are willing to give you a loan even if your credit is bad. However, it is important to note that although these dealerships will give you a loan, your interest rate and terms will not be favorable. Additionally, these dealerships may limit the amount of the loan you can obtain. Therefore, your car choices may be limited to used cars and/or older models.
If you cannot find a car dealership that will approve you based upon your credit alone, you may have to get a cosigner in order to qualify for the car loan. However, a cosigner is equally responsible for the loan. Therefore, if you do not pay the loan, the car dealer can go after the cosigner and can report negative information on his/her credit report. Because of these facts, your cosigned has to be somebody that trusts you (usually a family member such as your parents, brother, sister, and/or spouse). Having a cosigner will most likely get you the loan, but you must be responsible enough to make the payments so as not to hurt the cosigner.
If you are unable to get a loan on your own and a car dealership will not finance you even with a cosigner, now is the time to consider asking for loans from friends and/or family. Borrowing money from a friend or family member is always risky because should any problems arise in regard to repayment, not only will you have a financial problem but you will most likely damage your personal relationship with that friend or family member. As such, carefully consider whether you want to pursue this option when trying to obtain a loan for a car.
Remember, even though bad credit can hurt your chances of getting a loan, there are many car dealerships that will finance you regardless. However, if you are financed and have bad credit, your interest rate and loan terms will not be favorable. If you cannot qualify on your own, see if you can get a cosigner. Adding a cosigner will generally help you get the car loan. If all else fails, consider borrowing money from friends and/or family members. If you borrow money from friends or family members, make sure that you are responsible and repay the loan or else you will most likely damage your personal relationship with that friend or family member.