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The last sound you want to hear when you're rebuilding your credit is the clunk of a dying car.

Not only will buying a new car stretch an overburdened budget even tighter, but blemished credit also means you won't qualify for the best financing deals. The news isn't all grim, though. While lending isn't as loose as it used to be for car buyers with bad credit, there are still options out there.

Geoff Williams, a freelance writer based in Loveland, Ohio, found himself in such a pinch after he declared bankruptcy. "My car literally died on the freeway, and black smoke was coming out of it," says Williams.

Though he and his wife had another car, "it wasn't a very good one," he says, so they shopped around for a used car. Although the best deals on auto loans boast interest rates under 6%, "my interest is high -- around 20%," says Williams, who details his road to financial recovery in the book "Living Well With Bad Credit." "But I pay around $430 a month for a really good Subaru. In my case, it worked out fine."

Worse, few car shoppers with bad credit will even qualify for a traditional loan. According to CNW Marketing Research, based in Bandon, Ore., only one in 10 car loan applicants with FICO scores of 620 or below was approved through a bank, credit union or auto manufacturer's finance company in April 2010. For applicants with FICO scores between 620 and 749, eight out of 10 loans were approved.

But even if you find your loan denied, you're not stuck taking the bus. Williams says that a friend who was unable to qualify for financing because of credit problems instead rents a car a month at a time and renews the rental when the period is over. The auto rental agency offers a discount to those who rent frequently, "so his price is comparable to what I'm paying," Williams says. "And in his case, he never has to worry about maintenance issues."

A recovering market

Gone are the days when practically anyone could stroll into a car dealership, plunk down a little money -- or even none at all -- and drive out with a new vehicle. Yet "there are still a lot of financing options available, and the landscape has improved from a year ago," advises Eric Hoffman, a spokesman for Americans Well-Informed on Automobile Retailing Economics. The organization, composed of auto dealers and finance companies, aims to educate consumers about car financing.

If you belong to a credit union, check rates there first. Then use that information to try to get a better offer from a local bank or the dealer itself. "If you have less-than-stellar credit, shopping around is even more important, because it will give you a broader gauge for what different financial institutions are willing to offer," Hoffman says.

One option for people with low credit scores that's gaining in popularity is the "buy-here-pay-here" market. Once called mom-and-pop dealerships, buy-here-pay-here car dealers generally require around $1,000 down and "stay in close touch with the customer throughout the length of the loan," says Jennifer Reed, the automotive group editor for SubPrime Auto Finance News. Such dealers are more likely to finance people with bad credit, but "the customer is sometimes expected to make weekly or biweekly payments to stay current," Reed says. Some dealers will even align payment due dates with customers' paydays, and many also report good payment histories to credit bureaus, which can help borrowers improve their credit.