A car is a necessity for most of us. It is difficult to make a living without having a reliable means of transportation. You can take the bus or train, but the convenience of a car allows you to accomplish more in an efficient manner.

People with bad credit, often find it difficult to finance big name purchases such as homes, cars, furniture, appliances, etc. Having repossessions, bankruptcies, charge-offs, liens or judgments on your credit report identifies you as a credit risk and creditors are likely to be reserved when, it comes to extending you credit.

These obstacles however should not prevent you from owning what you need. Yes, it is true that you will probably have to make your purchase at a higher interest rate than someone with a good FICO score and you will have to shop around longer to find reasonable interest rates - but all is doable. If you have bad credit and your are trying to purchase a car, follow these guidelines and will drive off the lot in your own car:

Get your credit report

If you suspect that your credit leaves something to be desired, the first thing you should do, is understand your credit situation and how creditors view you. The only way to do this, is to get a copy of your credit report. Get your free credit report to find out your credit score.

Once you get your credit report, inspect it to ensure that all details are familiar and that they are no red flags. If you find any discrepancies, you will want to immediately fix any errors, as this will probably raise your FICO score and help you in your quest to purchase a car.

Financing before shopping:

Before you start shopping for a car, shop around for financing. It is important to do this before you go to the car dealership. The excitement of test driving a nice car and the sweet tongues of smooth car salesmen will have you driving off the when you havent even secured financing. This is a big mistake because you should never take possession of a car until everything is in writing. Tricky salesmen will sometimes goad you into taking possession of the car before all contracts and financing are finalized. Once you have taken possession of the car, they will call you and tell you that the financing did not go through and then slap you with a higher interest rate.

You can shop for a loan at larger banks or smaller local banks. Each of them have their own advantages. A larger bank may have a whole department totally decided to people with credit issues and so they will be very familiar with your situation. A smaller bank is likely to consider a car loan on a loan by loan basis. Walk into your local bank and sit down with a bank officer and explain your situation face-to-face. They are more likely to give you a loan once they understand your predicament. Also a face-to-face meeting will allow you to explain any discrepancies on your credit report.

A bank loan is preferred because a bank will not take advantage of the fact that you have poor credit by raising the price of the car, giving you a low trade in value or adding unnecessary extras like credit insurance and extended warranties.

Dealer Financing

If you are not able to secure a bank loan, your only choice is dealer financing. This is not a bad thing. You can still find a decent interest rate. The most important thing to remember here is not to get blinded by the interest rate. Some tricky dealerships might give you a low interest rate but hike up the price of the car or give you a low trade in value.