Car loans offer lenders a big ticket item with limited risk. While a lender's risks their entire investment on an unsecured personal loan a car loan represents less risk since the lender can take possession of the car if the loan is defaulted. Divorce often leads to bankruptcy and will impact on a consumer's credit score long after they have recovered financially. Specialized lenders have recognized that a poor credit score may not reflect on a consumer ability to make payments and have placed less emphasis on credit history and more emphasis on ability to pay.

National and regional lenders have emerged to service the very competitive bad credit car loan market referred to as the "Special Finance" or "Sub-prime" market. These lenders have further divided the "Special Finance" market up into different levels of risks to such an extent that there are lender's who has specifically targeted the most credit challenged consumer with the highest risk.

The good new is that no matter what your credit circumstances are, there is probably a lender out there for you.

Another phenomenon is the independent credit service that will process your request for credit and forward it to the lender that is most likely to approve the request. These services usually work with a car dealer who have access to both National and Regional lenders.

The Online Credit Application

The independent credit service has successfully introduced the online credit application to the market. The online credit application offers a no hassle approach to applying for credit. Anyone who has sat in front of a loans officer and had to explain their credit history will find the online credit application a blessing. If you decide to complete an online credit application make sure that it is secure. Look for a security certificate. Comodo and Verisign are two companies that offer

security certificates that I am familiar with. You should also look for a privacy policy to guarantee that your personal information will not be shared or sold.

A car loan is a big ticket item that can help rebuild your credit score. Some lenders will offer programs that will reduce your rate or allow you to renegotiate after a specified length of time if you have not missed or been late on a payment.

There are many lenders who specialize in products and services for consumers that have troubled financial histories including bankruptcy. An independent service will provide an online credit application and will give you access to network of lenders. Simply enter "car loans" in search box of your favorite search engine. Most of these service offer tools like loan and budget calculators.

What You Can Do?

The first step before shopping for a car loan is to evaluate your financial situation. By determining your income to debt ratio you can see what kind of monthly payment is feasible for you. You do not want to be overburdened by payments and find yourself in trouble again. Next you may want to check your credit rating and clean it up where possible. Your credit score is negatively affected by late payments, high debt to income ratio and past bankruptcy. Close any accounts that are not in use. Too many open accounts are a negative. Pay up any outstanding debts. If you have recently filed for bankruptcy and there are extenuating circumstances such as a lay off or divorce, consider writing a page of explanation to attach to your report.

Regardless of your past credit history there is almost always a lender who is willing to provide you with a car loan. The question is how much are you willing to pay for that loan? A few extra percentage points are worth the opportunity to rebuild your credit. But be sure that your financial house is in order before you apply so that you can qualify for the best rate and terms your current financial circumstance will allow.