What you should know about a bad credit car loan.

A bad credit car loan is a loan that is given to high risk customers at a higher interest rate. A high risk customer is a person who doesn't have a good credit score, or a person who doesn't have an established credit history.

There are hundreds, if not thousands of websites offering bad credit car loans. As with anything else, do your research. If a company doesn't disclose the interest rate you should walk away. Many bad credit auto loan companies don't like questions because they don't want potential customers to know how much money it really costs.

Some dealer groups (a company that owns many dealerships) own financial service companies which offer loans to people with bad credit.. They want to sell you a car (which they make money on) and they'll offer you a loan when a bank or other financial institution declines. Now they're making money on the car and the loan.

A dealership may only offer you an auto loan on a small selection of vehicles. These vehicles may have been rentals, or even cabs.

In other words, the people who drove them, didn't own them. They likely abused them and now you have to pay thousands more because you need a vehicle.

Solutions. They're simple and effective.

• If you have bad credit and need a car loan, do your absolute best to get a big down payment. The less money you borrow the less interest you'll have to pay.
• Instead of buying a more expensive newer vehicle, perhaps a less expensive used car could do the job.
• Always ask what the interest rate is. Keep in mind that a car loan for someone with good credit is anywhere between 0%-8% depending on the vehicle.
• You may qualify for a lower interest rate on a bad credit car loan if you have a co-signer.