You can buy a car, even with a bad credit score.

This fact should come as good news if you have been rejected one or more times for an auto loan recently due to your low FICO score. If your credit score is below 600, you have probably experienced your share of heartache when it comes to approaching auto financing lenders.

The truth is that you are not alone. Millions of other people deal with the same frustrations every day. In the U.S. alone, it is estimated that about 25% of consumers are credit-challenged. The vast majority of them need to buy a car but just can't seem to pull it off given their credit situation.

Find A Bad Credit Auto Loan

Bad credit auto loans are more common than you might think. However, there is a silver lining in this thundercloud. Just as hundreds of thousands of credit-challenged people get rejected for car loans each week, thousands of others are walking into dealerships with a smile on their faces because they have a signed loan pre-approval from a reputable lender under their arm.

Bad credit auto financing is only hard to qualify for if you lack the knowledge required to get approved. The secret to getting approved comes down to realizing one simple fact: your entire financial history and current creditworthiness cannot be summarized by a simple, 3-digit FICO score. Or, at least, it should not. Still, that is how most lenders view you: through the lens of your credit score.

While the average car financing lender will simply look right past you and say, "Next!" once they glance at your low credit score, bad credit auto refinance and finance lenders take a very different approach. It will behoove you to learn what this special class of lenders do look at - and how you can catch their attention.

Why Owning A Car Is So Important

What led you down the path of having to even consider a bad credit auto loan refinance or finance? It is no doubt because you see the value in owning a car. There are a number of benefits of having a car, and for many people car ownership is a necessity, not just a desire.

Among the benefits of car ownership are:

• The ability to get where you need to go, when you need to get there
• No longer having any need to rely on family and friends to get you around town
• Having more employment options, including the ability to take higher-paying jobs that are a bit farther away from home
• The chance to go shopping somewhere farther than stores that are just a walking distance from home
• The ability to go on road trips to other cities, towns and vacation spots
• Provides you with the transportation options you would require were you or someone you care about to require emergency medical attention

Not Having A Car Can Cost You

Many people avoid doing whatever they can to find auto loans for people with very bad credit because they are concerned that the whole thing will be too costly. After all, what about the costs of the higher interest rates that auto loans for bad credit individuals require? Those can add up, right?

But, there is another side to that story. Think about the ways that NOT having a car can cost you. In broad terms, there are two types of costs associated with not owning a car: hard costs and opportunity costs.

Hard costs are any costs that you incur by not having a car of your own, including:

• Having to take a taxi or bus each day to get where you want to go
• Paying friends for a ride
• Taking the plane or train when you could drive yourself on longer trips
• Having to pay an ambulance company thousands of dollars to take you or your loved ones to the hospital for mild emergency situations instead of driving them to the doctor yourself

Meanwhile, the opportunity costs you incur by not having a set of wheels to call your own include:

• Not being able to take that higher-paying job (or any job!) because you simply do not have a way to get yourself there
• Missing the chance to buy your groceries and other goods at a cheaper, “big box” type department store, being forced instead to buy your food and sundries at more expensive, local stores
• Losing out on valuable social situations like meetings, get-togethers and parties because you do not have a ride

Common Challenges In Qualifying For An Auto Loan

Of course, you probably already had the sense that your current lack of a car (or lack of the right car) costs you money. But, that brings us to where you are now: on a quest to find bad-credit auto lenders who will give you the right auto loan.

The most frequently-reported reasons for individuals not being able to qualify for a bad credit auto loan include:

• Not knowing how to find a bad credit car loan lender – or even that such auto financing options exist
• Lacking familiarity and knowledge about your own credit report
• Being unable to gather the right documentation together before applying to a car loan, bad credit or no bad credit
• Not being comfortable with the best way to approach and pursue a loan from one of these lenders

Why So Many People Struggle With Getting Qualified

Getting qualified for car loans for people with bad credit boils down to these four things:

• The right knowledge
• The right action
• Persistence
• Playing the numbers game

Auto loan success for low FICO score individuals really doesn’t depend on your credit score, your negotiation skills, or your financial smarts. Rather, getting approved for auto financing bad credit auto loans is about taking the right steps and going after what you want . . . what you need.

The Key Components Of A Car Loan

Whether you are looking for a car refinance with bad credit or a new car loan with bad credit, there are certain key components to every car loan deal that is successfully made in dealer finance offices, online and with banks every day. Those components are:

• Your credit score
• Your pattern of past financial behaviors
• You current income and employment situation
• The price of the car you want to buy
• The term of the loan you want to take out
• The amount of down payment you have ready to give the lender
• The interest rate for which you qualify
• The lender you choose

The more familiar you can become with each of these components, the better your chances of qualifying for the loan you are after.

5 Steps To Finding A Bad Credit Auto Lender

To get qualified for an auto loan with bad credit, take these 5 steps:

1. Find the right car at the right price first. If you are working directly with an auto dealer, be sure to arrange your choice of car and price with the dealer BEFORE visiting the finance office. And, if you are shopping online, use all of the financial calculators available to you to work out what your payments will likely be given different purchase amounts.
2. Order your complete credit report from each of the top 3 credit bureaus. Quickly note your score and then move on to the “meat” of the report, which includes all of the details of your past and current credit-related financial relationships. Take notes on all of the positive and negative details that you come across within your report.
3. Put together a down payment. Saving up for a down payment – preferably an amount that is equivalent to 20% or more of the total purchase price – accomplishes two things in your favor. First, it brings down your loan payment amounts to more reasonable levels. Second, it improves your chances of getting approved for a loan since it requires your lender to take less risk (in case of loan default) on the loan deal.
4. Prepare your documentation. Your financial life expands across multiple important documents that go well beyond your credit reports. These include: your pay stubs, W2 forms, 1099 forms, employment history, and references. Do yourself a favor and gather these important documents together now, before you start applying for loans.
5. Play the numbers game. Given your low credit score, you will want to build a list of auto lenders who specialize in working with people within your credit score range. These lenders know how to look past your credit score. They have built up a business based upon the idea of carefully and meaningfully dissecting the credit reports of even people with the worst credit scores in order to find “signs of life” that the person is indeed a creditworthy borrower. Important: be sure to play the numbers game by applying and getting pre-approvals from at least 3-5 bad credit auto lenders. Each lender you apply to improves your chances of qualifying for the best interest rates.

Get Your Keys, Let's Go

Now, it’s time to put together your plan and begin to take effective, consistent action to carry it out. By following the 5 steps shown above, you CAN apply and get qualified for a loan. Sure, the interest rate you pay will be higher than the rate you would be paying if you had a FICO score of, say, over 700. But, that is no reason to put off your dream of buying a car – or buying a better car than you have now – just because of your credit situation. So, take heart, put together a plan, and work that plan. You’ll be driving behind the wheel of your new car in no time.