Now, what about bed credit situations? What is bad credit anyway? Bad credit is missing payments on a regular basis, having loans go to default (meaning, you stopped paying), repossession, bankruptcy, or a high ratio of debt-to-income. These affect your credit reliability and your credit score tremendously! Banks don't always only use your credit score to determine financing, and will often look at your prior History to determine your credit-worthiness.Bad credit history is not the only thing reducing your credit score. Other causes of a low credit score are: Length of time you have had financing before, how many loans you have had and paid, loan amounts and how well you have paid on them (just the minimum due or greater than).
SO, the question is, if you have bad credit or a low credit score, how can you overcome this and get approved for financing? The best way is with a CO-SIGNER who has a good credit history! But you can also try Money Down, as well as a lesser priced vehicle!
Getting a good co-signer, maybe a parent, a spouse, or family member, goes a LONG WAY for help those with bad credit histories and low credit scores get approved! The banks will assume that the good credit signer will ensure the loan is paid (and in fact, a co-signer is REQUIRED to pay should the primary signer fail to do so --- if they don't, they will be affected by the same negative results, such as repossession or default of the loan).
There is also another solution: A secondary bank/lender. These are banking institutions that have relaxed requirements for financing, i.e., banks that don't require you to have a high credit score. These banks will accept lower credit scores, as long as certain parameters are met (you may need proof of income, W2 from previous year, proof of address). The downside to these banks is that they typically have higher financing rates --- rates that may be 8% APR or higher. That is one pitfall of bad credit or low credit scores.