Auto finance for people with bad credit

Expect to pay more. Resist paying a lot more.

Car buyers looking for help with a bad credit auto loans have turned out to be profitable customers for auto dealers.

So whatever bad news is on your credit report, the sentence above is good news for you. And here's why.

Auto dealers first turned to special finance customers as a way to expand their customer base. But what's really turned out to be the key, as the industry has matured since its founding in 1989, is that bad credit auto loan customers are very loyal, very grateful for the chance, and they turn out to be good repeat customers.

And repeat customers, to a dealership, are gold. The average car dealer spends roughly $500 dollars per car for advertising and such, so free customers are good for the bottom line.

Knowing this, you don't have to take your credit-challenged report to some buy-here, pay-here lot. You can work the Internet and get ahead of the game.

Be advised that most of the car loan sites you see on the Web work only with licensed, franchised auto dealers. This is not some sort of cheesy ripoff -- this is a fact of life in the auto business. There's really no such thing as a car loan at an auto dealership; there's what's known as a RISC, a retail installment sales contract that gets shopped electronically to lenders all across the nation.

If you're coming in with bad credit, be advised that nothing will help you more than a good downpayment. Remember, your credit score does not take into account how much money you have or how much money you make.

Your credit score is (in essence) a number representing your odds of paying off the debt without a problem. A stable job, a stable address and a solid downpayment can get you a better deal when it comes to a bad credit car loan.

At sites such as www.myfico.com, you can see how your credit score matches with current rates. Don't fret it too much -- the difference between a 9 percent rate and an 18 percent rate on a four-year, $10,000 loan is $1.49 a day. You can spend more than that on a daily Starbucks run -- and Starbucks won't help you rebuild your credit to get you a better rate next time.

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