There are many people across the country who have been experiencing hard financial times and bad credit issues. Educating yourself about what options you have available to you for your vehicle financing needs is the first step in getting a loan despite your bad credit. The pitfall those with less than perfect credit fall into is that they are so happy to get approved for the financing, they rarely stop to think or care about the terms and conditions of the loan they did get. Instead of falling into the same trap, here are some tips that will help to ensure you get the best deal for you and your financial situation.

Check In With Your Credit
While you may have an inkling of what state your credit score is in, make sure you confirm just where you stand. If you currently have a credit score under 500, you might want to postpone shopping for a car for the time being and focus on getting your credit score up. You can also start saving more cash to pay for the car outright because with such a low score, you could end up paying a very high interest rate (think close to 30%), which in the end will definitely cost you way more than you can afford.

Check Your Income
Since you are allowed to dedicate only 20% of your income toward a monthly car payment, review the amount of money your bring home per month and make sure it is at least $1200 a month.

First Time Buyer Incentives
Check with your local dealerships or online site to find programs that offer incentives to first-time buyers. With proper research before walking into a dealership, you will be better prepared to know what you can get and prevent the salesman from telling you otherwise.

Ask for Help
If you know your credit is not great, you may be able to find better financing if you find a willing co-signer to help you on the application. A co-signer with great credit can help your chances but keep in mind that being a co-signer on a loan (or having one) is a big responsibility and can be a sure-fire way to ruin good family relationships or friendships if you don’t live up to your end of the deal by skipping out or being late with payments, essentially single-handedly ruining the other persons credit.

Timing Counts
If you have improved your credit score past 500, found a co-signer, or otherwise improved your financial situation and are ready to make a deal, visit the car dealership at the end of the month, when incentives may be better. Car salesman might be more flexible to close a deal at the end of the month because commission is so close to coming in. The dealership’s finance department may also be more willing to bargain so they in turn can end their month on a high note.

Can You Get A Vehicle Loan with Bad Credit? was created by and is property of American Consumer News.

I wanted a vehicle that didn’t have a ton of miles on it, but was not set on having to buy new.  I understand that the value of a car depreciates so quickly that it’s really not considered a “good investment” by any means.  But I figure if I can get 10 years out of this car like I did my last car, (without a ton of repairs necessary over that time, either) then it’s a good enough investment for our family!

I selected a 2008 Chevy HHR.  This car is really cute, but that really wasn’t why I picked it!  It has 4 doors, which is huge to a mom with a bad back who has been struggling to get her 2 kids into carseats without back doors, let me just tell you!  It has incredible cargo area, and I got the additional safety package (airbags in the back doors for the kids, anti-lock brakes, front airbags, and some other stuff).  I was approved for financing through GMAC, and was given a choice of taking 0% interest over the 60 month loan; or $2,000 cash back.  I actually told the dealer I’d have to call him back, because I just didn’t know which option would be better!

I found an article on SmartMoney.com, with a calculator to help me determine whether or not I’d make out better with a 0% interest rate for the life of the cash loan or taking $2,000 cash back.  After entering in the finance details of the car, including the full price of the car (and adding in the extended warranty with $0 deductible) I discovered it was definitely better to take the 0% interest for the life of the installment loan- to the tune of $57 PER MONTH better.

The reason the 0% financing works out better for me is because had I chosen the $2,000 cash back offer, my interest rate would have been 8.8%.  This makes no sense to me, but it was explained to me that I qualified for either their 0% offer or cash back, but not for a low interest rate on top of the cash back. 

If you’re looking at buying a new car and have the option of taking 0% interest for the life of the loan, or receiving a cash back incentive- make sure you try out that little calculator on SmartMoney.com to determine which gives you the better deal.

Should You Take the Cash Back or Low APR Financing on a New Car? was created by and is property of American Consumer News.