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4 Steps to Getting a New Car With Bad Credit

NEW YORK (TheStreet) -- Having bad credit -- and these days, lenders see that as any credit score of 660 or lower -- can really crimp your ability to buy a new car.

That said, having bad credit doesn't mean you can't a buy a new car, SUV or truck. It just means you have to be diligent and creative.

According to a report from, with the right preparation and expectations subprime buyers can secure a new car loan responsibly and even develop smart financial habits to help improve their credit scores for future purchases.

"Contrary to popular belief, there are a number of reasons why a lender would help somebody with a troubled credit history to buy a new car," says Ronald Montoya, consumer advice editor at Edmunds. "If you do your credit homework, shop within your price range and make all of your payments, you'll not only improve your credit score but you'll also practice positive finance habits that will serve you well for years to come."

Edmunds offers the following to tips to help consumers with low credit scores slip behind a new set of wheels:

Start by knowing your credit score. Yes, every journey begins with a first step -- and your first step here is knowing where you stand with credit. Go to where you can get one free copy of your credit report once a year. It's good to spot so-called "risk factors" such as unpaid debts that you can square away, ultimately hiking your credit score. Do this at least 90 days before you start looking for a car.

Get pre-approved. Even though you have toxic credit, that doesn't mean you're out of luck for an auto loan. "Check with your own bank or credit union; it may be more willing to approve you if you already have an existing financial relationship," Edmunds says.

Bring "financial ammunition." Your credit may be in the tank, but you can still bring proof you're a good credit risk. "When you apply for financing -- especially at a dealership -- bring proof of improved financial stability," Edmunds says. "These items may include a recent pay stub, a utility bill and a list of personal references."

Keep the price low as possible. You're chances of getting approved for financing improve the lower you go on price. Plus, as Edmunds points out, "if you scale back and purchase a $17,000 compact sedan, you'll free up $100 per month. This is money you could use for gas, insurance or other bills."

Above all else, don't get down on yourself over bad credit. The problem can be corrected, and you can get a car.

Plus, you're not alone. According to Experian, low-credit buyers accounted for 34.1% of all new auto loans in the fourth quarter of last year, up from 32.8% in Q4 2012.

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