Financing a car can be your first step toward recovering from bad credit. Working with a sub-prime lender, you can secure reasonable rates for financing your next car purchase. Even though these lenders offer good rates, you can improve your loan with the following three tips.

1. Improve Your Credit Score

While you can't dramatically change your credit score overnight, it's still worthwhile to improve it. The slight difference in rates translates in to savings of hundreds of dollars.

Start by making sure your financial information is accurate. Check out your credit report to be sure everything is in proper order. You may also want to spread out your short term debt across multiple accounts, so no one card is maxed. Paying off your debt will also improve your score.

To gain instant 'prime' rating status, find a co-signer willing to help you reestablish credit. Based on their credit rating, you can qualify for 'A' rated loans.

2. Select Better Loan Terms

The loan terms you select also affect your loan costs. For instance, the shorter your loan period is, the lower your rates. Applying online with a lender can also qualify you for discounts on fees or rates.

Buying from a dealership will also help you get lower rates, even if you buy a used car. Lenders view cars purchased from a dealership as less of a risk.

But if you want a lower car payment, extend your loan terms up to seven years. You also have the option of refinancing your car loan if rates or your credit improves.

3. The Down Payment Factor

Your down payment can greatly reduce your rates. Most lenders prefer 20% down for an average loan. While you can get 100% financing, it will cost you in both rates and fees. For the lowest costing financing, plan on a down payment of 50% or more.

To find the most favorable numbers for your car financing, take some time to request loan quotes. You can play with the loan terms, amount, and down payment size to understand how each will affect your monthly payment. By comparing a number of different companies, you can find the best possible deal.

Good rate are available for people with poor credit; you just have to find them.