3 tips to find auto loans for bad credit

The subprime borrowing market hasn't quite made a comeback yet, but that doesn't mean you need to sit on the sidelines. Auto loans are at an all-time low, and there are still some lenders offering decent loans to those with less-than-stellar credit. You may not get the best loan out there, but you might be able to snag one that still fits your budget.

Check your credit

By law, you can get up to three free credit reports per year from the three main credit reporting agencies -- Experian, TransUnion and Equifax. That means you can check your credit every four months. Checking your credit will reveal any flaws in your credit history that could affect the score. Make sure to fix any flaws and update any necessary information. Looking at your credit history might actually reveal that your credit is better than you think.

Shop for all types of loans

Don't just limit yourself to auto loans for bad credit ; try shopping at various lenders to see the rates that they are offering. Your tarnished credit history could look better to one lender over another. Be wary of lenders that specifically cater to subprime borrowers, as they may give you a bum deal. Try shopping at your bank or a credit union first-- they are more likely to give a longtime customer a better loan. Your employer or insurance company may even offer auto financing.

Go for short terms

The promise of lower monthly payments over a longer period of time can be enticing, but if you need an 84-month car loan, you probably can't afford that vehicle. You need to budget and be honest with yourself about what you can afford. Go for the lowest annual percentage rate over the shortest period of time. Having tarnished credit doesn't mean you have to settle for any loan that comes your way. Take your time and look for an auto loan for bad credit that you can reasonably afford.

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