auto loans for students with low income

If you have a bad credit score , you may be concerned about finding a car loan with favorable terms. Getting a bad credit car loan for low income students can be tricky business. Some lenders may only consider you for subprime car loans, which often have less favorable terms and higher monthly payments.

But don't be discouraged. Even if your credit score needs to improve, you can still find a car loan that won't break your monthly budget. And making consistent payments on a car loan is a great way to repair credit.

Here are nine tips for getting a bad credit car loan.

1. Know your credit score

Before starting the shopping process, it is important that you know your credit score. At Bankrate, you can get your credit report and credit score for free, and also learn more about the factors behind your score.

There may be factors you can address right away, like making late payments. Taking steps to repair your credit score before you start shopping can help you find a more favorable position with some lenders.

2. Research, research research

It is important that you prepare as much as possible so that you are not caught off guard when it comes time to negotiate.

Your research should include key terms, such as Annual Percentage Rate (APR), which refers to the annual interest rate on a loan. If you are buying used, it is also helpful to know the Kelley Blue Book value of your preferred car.

Our auto loan resources page offers a wide variety of articles, questionnaires, and calculators, all designed to help you make a more informed purchase.

3. Compare prices

Once the buying process begins, bad credit loans are n't limited to just one lender. There are a variety of lenders who offer bad credit auto loans. And they may want to compete for your business.

Even two candidates with identical credit scores may not be the same in the eyes of a lender, says John Van Alst, a staff attorney at the National Center for Consumer Law. "Even if your score is tarnished, you may be more likely than someone with the same score and no (credit) history," he says.

Don't be distracted - Lenders run a credit check during the application process. Stringent credit checks tell the credit bureaus that a borrower is about to incur more debt and can cause their credit score to drop. If the process takes too long, it could be more difficult to negotiate favorable terms.

To be safe, we recommend visiting three different lenders within a 14-day period.

4. Prequalify with banks and credit unions

“Even if you don't think you can get a loan, go to your bank, go to your credit union first,” says Van Alst. One of your most powerful negotiating tools may be prequalifying for a loan from a bank or credit union.

If you have a bad credit score, it can be difficult to pre-qualify for a bad credit car loan at a bank. Banks are for-profit organizations and are generally more restrictive when it comes to making loans. But if you have a relationship with your bank, you may have better luck finding a manageable car loan.

Credit unions are non-profit organizations that are generally owned by their members. As a result, they may be more open to lending to a bad credit borrower. Credit unions require their account holders to be members, but the membership requirements can be easy to meet.

5. Make sure the terms are final

If you finance through a reseller, always make sure the terms are final before signing. If you don't, you may face higher monthly payments or a higher down payment in the future.

It's known as a "yo-yo scam." Dealerships tell car buyers that their financing is not complete and that they must accept a higher interest rate.

6. Avoid high-risk lenders

Sub-prime lenders may seem like a safe bet to anyone wondering how to get a bad credit car loan. These lenders generally serve customers with lower credit scores and can make the car buying process seem easy and stress-free at first.

Subprime auto loans can carry sky-high interest rates and aren't likely to help you improve your credit score. Many subprime loans also use your vehicle as collateral. So if you don't make the payments, you risk losing your car entirely.

Always do your research beforehand and only consider high-risk lenders if you can't find another financing option.

7. Buy loan terms, not monthly payments

The lower monthly payments look good on paper and are generally used to attract buyers. They can actually lead you to pay more for your car over the life of the loan. Because bad credit auto loans can have higher annual percentage rates, you may end up paying more than the full value of the car at the end of the loan.

When shopping, look for the most favorable terms, usually the lowest APR for the shortest period of time. That way, you will have more manageable monthly payments with reasonable interest rates. If you cannot find a low APR, you may consider purchasing a different vehicle.

8. Bring a friend and consider becoming a co-signer

Ask a friend or family member to join you, says Massachusetts-based consumer attorney Yvonne Rosmarin. Inviting someone you trust to the negotiating table can help inspire trust. And trust, combined with technical knowledge, can lead to more favorable loan terms.

If it's someone you really trust, consider asking them to be a co-signer. Co-signers reduce much of the risk for lenders: they will be responsible for the loan in the event that you do not meet your payments. Adding a co-signer can be a solid negotiating tool, and generally results in a lower interest rate.

Make sure you can make payments before hiring a co-signer. If you miss payments and the debt falls on them, it can permanently damage your personal relationship

9. Be on the lookout for add-ons and scams

Non-preferred buyers are more likely to find loan agreements with non-essential goods and services, says Josh Frank, former principal investigator for the Center for Responsible Lending. Other costs, like car insurance fees, can add up for non-preferred buyers.

Never let the loan depend on the purchase of any add-ons, such as extended warranties, after-sales services, and even car insurance.

Bad credit doesn't have to result in bad terms

Unfortunately, if you have bad credit, it can be more difficult to get a car loan. You may face less favorable terms or even abusive lending practices.

The good news is that coming to the negotiating table with preparation and research can help you find a loan with a much lower rate. First, find the right loan for you and put it in to help improv