How to get a car loan with bad credit

How to get a car loan with bad credit

If you are among those who is suffering from bad credit, but have a fetish for cars, here is some good news for you. There are a lot of banks that offer auto loans even to those who are in their bad credit customer list. The process can be a little difficult, but in the end, you are sure to drive away with your dream car. There are plenty of ways to apply for a car loan; you just need to know where and how. Some of the banks that offer auto loans despite of a bad credit are as follows:

Banks offering auto loans to customers with bad credit

We have found 9 top banks that can help you buy a vehicle even if you are struggling with your credit.

1. JP Morgan Chase

To finance a car with the help of JPMorgan Chase Bank, you must either be an existing customer of Chase, or purchase the car within the Chase dealer network. This bank even finances non-Chase customers; however, the credit decision and other processes will be different. All applications are subject to credit approval by Chase. The customer should accept all terms and conditions with regard to vehicle make, age and mileage.

2. Bank of America

You might be lucky to get a car loan within 60 seconds and upload documents online, if you decide to go ahead with Bank of America. You also get to know how much you can afford, so that you have a budget in mind before going car shopping. Bank of America has a huge authorized dealer network that will help you to streamline your process.

3. Wells Fargo

With over 65 years of experience in providing auto loans, Wells Fargo can be a good bet while choosing a lender for your car. Its loan options are tailored as per customer demands. The bank also offers exciting customer relationship discounts that can get you a car loan at a cheaper rate.

4. PNC Financial Services

PNC auto loans are designed as per customer needs. Whether it is buying from a dealer, from a private party, buying a lease or even refinancing an auto loan, they cater to everything. You just have to give 15 minutes of your time, within which the bank authorities would complete all formalities. You can walk out with a check in your hand and buy your dream car within your budget.

5. Citigroup Inc

Owning a car is now becoming a necessity more than a luxury. With an increase in car prices, buying a car seems to be unaffordable. However, Citigroup enables its customers to buy a car in easy installments. It provides real value for money and maintains a healthy customer relationship.

6. HSBC

HSBC Auto Finance brings a plethora of auto loans that you can choose from. It is easy to find as the bank is located at every corner of the world. The bank offers variety of attractive features such as zero down payment option, quick online payments, reduced interest rates and much more. It will not only help you to save time but will allow you to monitor your transactions, giving you an insight of all account activities.

7. Santander Bank

Santander Bank claims to offer an instant auto loan quote within 60 seconds. All you should do is complete the form, get a pre-approval and drive your dream car. The bank allows you to get pre-qualified regardless of your credit score.

8. Capital One

Finance your car with Capital One without any risk to your credit score. The bank also clears out all financing terms and conditions, before you can walk in to a dealer. This will make sure how much you can afford and will not be too heavy on your pocket.

9. ABT Bank

American Bank Trust offers auto-loans at competitive interest rates for used as well as new cars. It has a budget-friendly repayment option that the customer can choose as per their convenience. The bank also offers a free pre-approval, so that you can bargain better with the dealers.

What should you know to apply bad credit auto loan?

These banks help people to seek an auto-loan even if you don’t have enough money right now. The bank recommends to first get your auto-loan approved, so that you know your budget well in advance. They believe in giving its customers a chance to improve their credit history and so offer some car buying tips.

All of us deal with credit problems. This can be because of a sudden medical emergency, irresponsible spending behavior or simply a callous approach towards paying EMIs. Before approaching a bank for an auto-loan, we should remember that ‘There is nothing called a free lunch’.

Although banks might welcome all its customers, but those with a bad credit history are often charged a higher rate of interest. This seems to be fair enough, as the bank only wants to make sure that you pay back their money.

Also, you should be ready with a good amount of down payment before you venture into a loan. Doing so will increase the confidence in the lender and will make your job easy.

How to get an auto loan approval with bad credit?

Doing your homework well in advance will make your life simpler. The very first thing you should do before applying for a loan is check your credit score yourself. Do not make assumptions and come to a vague conclusion.

You might be a loan defaulter or might have extended your budget, but let the lender decide if you are eligible for their loan. Improve your credit score and start managing your finances effectively. All of us make mistakes, but not everyone works towards rectifying one’s faults.

Check auto loans online, as it is not only easy but it will give you clarity on interest rates and EMIs. There are several websites that will also link you with a financial institution.

Lastly, nothing like getting a car loan pre-approved. It works best when you have a budget in mind. All you need to do is stick to it. This will help you look for your dream car in a more practical way. If you feel that the vehicle you are looking for is out of your price range, try and negotiate. Good negotiation skills can get you what you desire.

How to get a car loan with bad credit

If you are among those who is suffering from bad credit, but have a fetish for cars, here is some good news for you. There are a lot of banks that offer auto loans even to those who are in their bad credit customer list. The process can be a little difficult, but in the end, you are sure to drive away with your dream car. There are plenty of ways to apply for a car loan; you just need to know where and how. Some of the banks that offer auto loans despite of a bad credit are as follows:

Banks offering auto loans to customers with bad credit

We have found 9 top banks that can help you buy a vehicle even if you are struggling with your credit.

1. JP Morgan Chase

To finance a car with the help of JPMorgan Chase Bank, you must either be an existing customer of Chase, or purchase the car within the Chase dealer network. This bank even finances non-Chase customers; however, the credit decision and other processes will be different. All applications are subject to credit approval by Chase. The customer should accept all terms and conditions with regard to vehicle make, age and mileage.

2. Bank of America

You might be lucky to get a car loan within 60 seconds and upload documents online, if you decide to go ahead with Bank of America. You also get to know how much you can afford, so that you have a budget in mind before going car shopping. Bank of America has a huge authorized dealer network that will help you to streamline your process.

3. Wells Fargo

With over 65 years of experience in providing auto loans, Wells Fargo can be a good bet while choosing a lender for your car. Its loan options are tailored as per customer demands. The bank also offers exciting customer relationship discounts that can get you a car loan at a cheaper rate.

4. PNC Financial Services

PNC auto loans are designed as per customer needs. Whether it is buying from a dealer, from a private party, buying a lease or even refinancing an auto loan, they cater to everything. You just have to give 15 minutes of your time, within which the bank authorities would complete all formalities. You can walk out with a check in your hand and buy your dream car within your budget.

5. Citigroup Inc

Owning a car is now becoming a necessity more than a luxury. With an increase in car prices, buying a car seems to be unaffordable. However, Citigroup enables its customers to buy a car in easy installments. It provides real value for money and maintains a healthy customer relationship.

6. HSBC

HSBC Auto Finance brings a plethora of auto loans that you can choose from. It is easy to find as the bank is located at every corner of the world. The bank offers variety of attractive features such as zero down payment option, quick online payments, reduced interest rates and much more. It will not only help you to save time but will allow you to monitor your transactions, giving you an insight of all account activities.

7. Santander Bank

Santander Bank claims to offer an instant auto loan quote within 60 seconds. All you should do is complete the form, get a pre-approval and drive your dream car. The bank allows you to get pre-qualified regardless of your credit score.

8. Capital One

Finance your car with Capital One without any risk to your credit score. The bank also clears out all financing terms and conditions, before you can walk in to a dealer. This will make sure how much you can afford and will not be too heavy on your pocket.

9. ABT Bank

American Bank Trust offers auto-loans at competitive interest rates for used as well as new cars. It has a budget-friendly repayment option that the customer can choose as per their convenience. The bank also offers a free pre-approval, so that you can bargain better with the dealers.

What should you know to apply bad credit auto loan?

These banks help people to seek an auto-loan even if you don’t have enough money right now. The bank recommends to first get your auto-loan approved, so that you know your budget well in advance. They believe in giving its customers a chance to improve their credit history and so offer some car buying tips.

All of us deal with credit problems. This can be because of a sudden medical emergency, irresponsible spending behavior or simply a callous approach towards paying EMIs. Before approaching a bank for an auto-loan, we should remember that ‘There is nothing called a free lunch’.

Although banks might welcome all its customers, but those with a bad credit history are often charged a higher rate of interest. This seems to be fair enough, as the bank only wants to make sure that you pay back their money.

Also, you should be ready with a good amount of down payment before you venture into a loan. Doing so will increase the confidence in the lender and will make your job easy.

How to get an auto loan approval with bad credit?

Doing your homework well in advance will make your life simpler. The very first thing you should do before applying for a loan is check your credit score yourself. Do not make assumptions and come to a vague conclusion.

You might be a loan defaulter or might have extended your budget, but let the lender decide if you are eligible for their loan. Improve your credit score and start managing your finances effectively. All of us make mistakes, but not everyone works towards rectifying one’s faults.

Check auto loans online, as it is not only easy but it will give you clarity on interest rates and EMIs. There are several websites that will also link you with a financial institution.

Lastly, nothing like getting a car loan pre-approved. It works best when you have a budget in mind. All you need to do is stick to it. This will help you look for your dream car in a more practical way. If you feel that the vehicle you are looking for is out of your price range, try and negotiate. Good negotiation skills can get you what you desire.

It’s possible to get a car loan even if you have poor credit. In this article, we’ll explain how to get a car loan with bad credit in 2021.

How to get a car loan with bad credit

How to get a car loan with bad credit

It’s possible to get a car loan even if you have poor credit. In this article, we’ll explain how to get a car loan with bad credit in 2021.

Like most people, there comes a point in your life when everything seems to be going wrong. Whether it’s a divorce, getting laid off a job, a failed business, or sickness in the family, the sad reality is that most of us aren’t prepared for a big crisis. When plights of life strike, one of the first tangible aspects of life they hit is our financial health. For most people, it’s not just about needing to adjust to a smaller budget. It’s about suddenly not being able to make a loan to alleviate the financial loss; or not being able to get a car for your job; or even not being able to move to a new home or even an apartment — all because of a negatively impacted credit score.

While bad credit history doesn’t equate to you having a poor work ethic or being irresponsible with finances, banks and most other traditional lenders would rather not take the risk. The truth of the matter is that the world of financing (for vehicles, personal loans, or otherwise) is still a statistics game. Statistically, people with bad credit are bigger risk borrowers. This is why you’re having difficulty in getting an auto loan from a dealership or a car loan from the bank.

Want free money?

While people would typically say it’s a bad idea to even think about big ticket purchases like cars or getting into auto loan agreements when your credit standing is poor, sometimes you just need a car to get back up on your feet, or to get to that new job cross-state, or even to (actually) start improving your credit rating. But when banks and traditional lenders won’t let you; how are you supposed to do it? Before getting to the how, there are a few things for you to consider:

1. Get a co-borrower

One of the easiest ways to secure bad credit car financing is through getting a co-borrower with good credit to go on your application. Whether it’s a parent, partner, or spouse, your chances of securing a car lease will drastically increase. This is because, on paper, someone else’s assets and income are combined with yours during the qualification process. So if there’s someone you trust and trusts you enough to be a co-borrower, you’re going to want to talk to them about this. Chances are, you’ll even get better interest rates.

2. Go with the little guys (Mom & Pop lenders)

Not everyone is comfortable with asking family or partners to become co-borrowers, or even have someone in their lives who are financially capable of being a co-borrower.

When we asked John R, Financial Editor of Whippio.com, “When you have poor credit rating and getting a co-borrower is not an option, one of the best things you can do is to go with a smaller financing company. Unlike big companies like RoadLoans (US) and most banks, the mom & pop -ish stores like Alpha Car Finance (AU) are more likely to let certain qualifiers slide to get a new customer.”

3. Employment History

If you want to try your hand at traditional lenders, then one of the first things you should look into is your employment history. ext time you start a new job, learn how to start it the right way. Take note that having a history of jumping from one job to another is a big red flag for most companies. This is because they’ll always be questioning whether or not you’ll be able to sustain this job and if not, how will you handle your repayments? N

4. Residency

The length of time you’ve lived in an area or multiple areas is a big deal as well. If you’re the type to move addresses every six months then you might not be considered. The less likely you are to stay put, the higher risk for them.

5. Expenses Trump Income

For the smaller companies, making $100 to $700 a week is usually the minimum. Now you would think that the higher your income, the better your chances of getting approved, right? Not necessarily. So long as you meet the minimum requirement of weekly income, the rule of thumb is always going to be expenses trump income. Even if you’re earning $3000 per week, a lender would still be wary of approving you if your expenses are $2900 per week. This means you only have $100 to spare for emergencies and your car finance. Now compare this to making only $700 per week but with expenses of only $300 per week. That $300 liquid in your cash flow makes you a stronger candidate for approval than if you’d have higher income but with higher expenses.

6. Have some money in your account

If you want to increase your approval rate with lenders, make sure that you have some money in your account. To investigate your income and expenses, financing institutions would ask you for (typically) last 3 months’ bank statements. Now if you only have $300 in your account, that might be taken against you. This is because of the assumption that people who don’t have padded savings might not be able to fulfill their repayments during emergencies. But if you have a few thousand in your account especially over the last three months, you’re more likely to be considered even with poor credit standing or lower-income because you have that safety net in case of emergencies.

Car loans are available for people with bad credit, but they typically have high interest rates. In an ideal world, you can work on building up your credit before purchasing a new car. However, this isn’t always possible. If you need a car now, you’ll have to bite the bullet and do so.

Fortunately, there are some ways to get a better car loan, including shopping around and making a good-sized down payment. Below is more information on getting an auto loan with poor credit.

Check Your Credit Score

Claim a free copy of your credit reports. This way, you’ll know where your credit falls and the types of loans you’re eligible for. Generally speaking, a credit rating of 669 or less is considered fair or poor. If you don’t need a car immediately, we recommend working on bringing up your credit score. Things you can do include:

  • Pay all your bills on time
  • Reduce your debt as much as possible
  • Check your credit report for errors
  • Have any inaccuracies removed from your report

Research Different Auto Lenders

If you can’t wait on a used car, you’ll need to find out what auto lenders serve people with lower credit scores. These lenders typically have higher interest rates but they can help you get the car you need in a pinch. Here’s a complete list of specific auto loans that are good for people with poor credit.

Save for a Down Payment

If you can put money down on your used car purchase, you can take out a smaller loan and pay less in interest overall. Plus, having a down payment can help you secure a loan easier as this is something that many lenders take into consideration when determining risk.

Consider a Cosigner

Another option that’s worth thinking about is adding a cosigner to the loan. If you have someone who is willing to do this, they can help you qualify for a better loan and interest rate. However, the cosigner is also assuming this risk, so make sure you’re prepared to make all the payments on time. Otherwise, their credit is at risk.

Check with a Credit Union

Credit unions are often willing to work with people who have bad credit. And, many credit unions sell vehicles they have repossessed from previous owners, which means one-stop-shopping for you. Check out the inventory from RepoFinder – the nation’s largest database of repo vehicles. Many credit unions sell their repo inventory at discounted prices and are willing to work with people who have low credit ratings.

As you can see, it is possible to get a car loan with bad credit. Try to give yourself time so that you can make the right decision for your needs and budget. Browse RepoFinder’s inventory and see the wide selection of sedans, pickups, crossovers, minivans, etc. that we have available through local credit unions.

Contact Us

You know what we don’t care about at the Larry H Miller Used Car Supermarkets? Your credit score. We care about your situation. We care about helping you solve those transportation needs. We care about saving you money. We care about making sure the payment fits your budget. And we make sure that you don’t lose all that money on a new car.

This is why Larry H. Miller Used Car Supermarket is your strong and reliable partner to re-establishing your credit:

  • We work with more than 50 lender partners, with 15 of them specialized in less than perfect credit.
  • We have financing options for nearly every credit situation; like discharged and open bankruptcies, re-possessions, tax ID number status, divorces, first time buyers …
  • Size does matter! Because of the volume of contracts we send to our lender partners we can often offer better rates, lower payments and more advantageous terms – for you!
  • We have special programs for trucks and import vehicles
  • We have friendly trained finance professionals who have years of experience, finding you the best vehicle at the payment that is right for you.

Did you know?

  • That installment loans, such as auto loans, are the fastest way to improve your credit?
  • We offer programs that lower your rates simply by you making your payments on time?
  • We offer programs with little to no money down?
  • Our finance partners report your payment history to all three credit bureaus?

*All financing offers are on approved credit.

UNDERSTANDING CREDIT: HOW TO GET FINANCED

Our onsite credit specials understand that bad things can happen to good people, and if your credit is challenged, or you are going though a bankruptcy, or just want to refinance your current auto loan give us a try. Allow one of our trained credit specialists to work with you to find a suitable financing option, and just because your credit score isn’t great, that doesn’t mean you have to pay a high rate or not get the vehicle that fits your wants and needs. With our 55 store buying power, we’re able to leverage our relationship with lenders and banks all over the country to get you the most competitive and affordable rates possible.

There are many factors that come into play when a creditor makes a decision on whether or not to give you a loan for purchasing a vehicle. The four top reason are: Application Information, Credit History, Down Payment, and Vehicle Selection.

  • Application Information: Information you provide such as employment, residence and income information.
  • Credit History: Information of all other credit in your credit file.
  • Down Payment: The amount of money you are putting toward the vehicle or the total value of our trade.
  • Vehicle Selection: The year, cost, and the mileage on a vehicle.

Your budget is the most important thing when buying a car and getting approved for finance. This includes how much you make to how much you pay already in bills. Also, having a nice down payment will increase the chance of better rates and monthly payment. It doesn’t matter if you have bad credit, dealing with bankruptcy, you have no credit, going through a divorce, or are a first time buyer Used Car Supermarket can help.

Why Choose Used Car Supermarket?

Larry H Miller Used Car Supermarket serving Salt lake City, UT understands that times are tough and getting approved is not as easy as it sounds, but we are here to help and have built an entire department designed to help those in need by finding you a reliable vehicle while rebuilding your credit. Fill out our quick and easy Approval form online or come on in today, and let our credit specialists help you get back on track.

  • Receive useful advice and information about your current auto loan
  • Learn about finance while in a bankruptcy chapter 7 & 13, and learn there are programs that can help lower your interest rate a full 2% per year.
  • Experience service and quality with our credit specialists at Used Car Supermarket, and let them assists you in your future good credit.
  • Our lenders report to all three major credit bureaus (Experian, Equifax, and Transunion) so that you’ll start rebuilding your credit instantly.
  • Used Car Supermarket makes the approval process easy with as little as $0 down and simple qualifying (driver’s license & pay stub).
  • The door to your new vehicle is easy to open.

If you need another vehicle but your current one has negative equity, you may be able to roll it over onto your next auto loan. But just how much negative equity can you roll over, and how much should you? Here’s some guidance.

Roll Over Amounts Can Vary

When you owe more on the vehicle than it’s worth, it’s called being underwater on your loan or being in a negative equity position.

Some borrowers that are underwater on their car loan consider rolling the negative equity onto their next auto loan. Depending on how much negative equity you have, you may be able to roll all of it over – but it depends on your budget, what you qualify for, and the lender you’re working with.

The more negative equity your car has, the harder it can be to sell or trade in your vehicle. If your auto loan is hundreds or even thousands of dollars more than what your car’s current market value is, then selling it for what you actually owe becomes a challenge.

Odds are, the amount of negative equity your vehicle has is going to be unique to you. Determining how much negative equity your car has means comparing your existing loan balance to the vehicle’s current value.

Rolling Over Your Vehicle’s Negative Equity

When you roll over your negative equity you’re adding the difference between your car’s value and your loan amount onto your next auto loan.

If you have $1,000 of negative equity on your current vehicle, and you purchase a vehicle for $10,000, your next loan balance would be $11,000 with the negative equity rolled in. You’re essentially combining your loan balances into one, so it’s similar to debt consolidation.

However, whether or not this is possible depends on how much you can reasonably afford. A lender may not approve a loan that exceeds the next car’s value by too much because lenders also take into account your loan-to-value ratio.

A loan-to-value, or LTV, ratio is your loan amount compared to a car’s actual cash value (ACV). It’s calculated by dividing your loan amount by your ACV, and it’s typically expressed as a percentage. Most auto lenders typically have a maximum loan-to-value ratio of around 125%. This means that your vehicle’s loan shouldn’t exceed more than around 125% of it’s value.

Since rolling over negative equity means adding to the total balance of your next auto loan, depending on how much negative equity your current car has, it could exceed that common 125% rule.

How much negative equity you can roll over also depends on your personal situation. Every lender varies in their requirements, and everyone’s circumstances are different – and that includes how much income and available income they have. If your loan balance with the negative equity factored in creates a high monthly payment that your available income just doesn’t have room for, you’re not likely to get approved for the auto loan either.

Believe it or not, lenders don’t want to approve car loans that overextend borrowers. And they prefer to approve loan amounts that are comparable or close to the vehicle’s value.

Consider the Trade-In Treadmill

If you’re always rolling over negative equity on your auto loans, then you may be on the trade-in treadmill. It’s commonly defined as a cycle of being underwater on your car loan, and opting to just roll that negative equity each time you buy.

It’s an easy cycle to fall into, too.

Because rolling over negative equity means increasing how much you need to borrow, it also means more interest charges, and possibly, longer loan terms to make the monthly payments more affordable. Before you know it, you’re struggling to pay off the loan quickly enough to keep up with the vehicle’s depreciation (loss of value over time).

How to get a car loan with bad creditEach time you roll over negative equity, you’re likely to start your next auto loan in a negative equity position again because you likely borrowed more than what the vehicle is worth.

Getting off the trade-in treadmill can be as easy as waiting until your loan balance catches up with your vehicle’s value. Staying current on your auto loan and keeping your vehicle in good shape can help you catch up, or even making extra payments when you’re able to can help. Over time, your car’s depreciation usually slows down, too, if you maintain it.

Bad Credit Auto Loans and Negative Equity

Many bad credit borrowers can find themselves in a negative equity position if their interest rate is high which makes it hard to pay down their loan quickly. Since your credit score is typically the most important factor in determining your interest rate, a borrower with credit issues may be more likely to have an underwater auto loan due to interest charges and a high loan balance.

Fortunately, one of the better ways to improve your credit score is by taking on new credit that improves it. An auto loan that’s reported to your credit reports means your timely payments are reported, too. If you maintain a good payment history on your car loan, it could mean ending the loan with a better credit score than when you started.

Subprime auto loans are reported to the credit bureaus, and they’re typically for borrowers with credit challenges such as bankruptcy, no credit, situational bad credit, and other tough credit situations.

If your current car loan isn’t helping you improve your credit score, it may be time to consider a subprime car loan that’s reported to repair your credit. A higher credit score means a better chance at auto loan approval and qualifying for better a lower interest rate next time around.

Need Auto Loan Resources?

At Auto Credit Express, we know how tough it can be for borrowers with credit challenges to find a lender that can help them get the vehicle they need. And trying to find a lender can be time-consuming and a hassle – so let us help you!

We’ve cultivated a coast-to-coast network of dealers that are signed up with subprime lenders that specialize in assisting borrowers with unique credit situations. If you’re in need of a car loan and you’re not sure where to go, let us guide the way. Fill out our completely free, no-obligation auto loan request form. We’ll look for a dealership in your local area that’s signed up with bad credit lenders.

Get your free credit score now, and get a copy of your most recent credit report!

Yes, it’s possible to get a bad credit car loan and only make a $700 down payment. The key is to work with the right lender, and pick the right vehicle. You have a much better chance of getting a car with a $700 down payment from a subprime lender, since their down payment requirements are fairly straightforward and they offer loans to bad credit borrowers. If you’re curious as to how you can get an auto loan with a down payment under $1,000, keep reading.

Down Payment Requirements for Subprime Lenders

How to get a car loan with bad creditThe down payment requirement varies by lender, but the general standard for subprime lenders is $1,000 or 10% of the vehicle’s selling price, whichever is the lower amount. This means you may only need $700 down if you choose a car that sells for $7,000, although you have the option to make a larger down payment if you want.

You have three options to choose from when it comes to putting money down:

  1. Trade-in equity – If you have a vehicle that’s worth more than the loan balance, it has equity. You can trade the car in and use the equity to meet the down payment requirement.
  2. Cash – If you don’t have a vehicle to trade in, you can use cash for the down payment.
  3. Combination – If you have a trade-in, but it doesn’t quite meet the down payment requirement, or you want to put more money down, you can add cash to the trade equity.

Keep in mind that if you have a trade-in that has negative equity – meaning it’s worth less than what you owe on its loan – you may not be able to trade it in as easily. In this case, you may have to make up the difference between the actual cash value of the car and the loan balance in order to get approved.

Some lenders allow you to roll over negative equity into the new loan, but this is ill-advised. The reasons why are because it increases the size of your new loan, making it more expensive in the long run, and you become even more upside down on the new loan.

How a Larger Down Payment Helps

Like we mentioned earlier, you can make the minimum down payment and probably be in good shape. But, if you have bad credit, we recommend that you put the most money down that you’re comfortably able to. A down payment of 20% would be great, but anything above the minimum helps.

Putting more money down helps you save money in the long run. Not only does it lower your monthly payment, it helps you save money in interest charges. This is especially helpful if you have bad credit and can only qualify for a higher than average interest rate. A higher APR makes the the loan more expensive, but a larger down payment can help you combat this.

You can always choose to refinance for a better interest rate once your credit score improves and at least a year has passed since taking out your original loan. In the meantime, you can lower the total cost of your loan by putting more money down.

Ready to Get Started?

The bottom line is this: you can make a down payment as low as $700 if it meets the lender’s requirement, but we suggest putting more money down if possible. If you have your down payment ready to go, but don’t have a dealership to work with, we want to help.

At Auto Credit Express, we’ve been helping consumers find financing for over 20 years by connecting them to local special finance dealers. To get started, all you have to do is fill out our simple and free car loan request form. After that, we’ll get right to work matching you to a dealership in your area.

Get your free credit score now, and get a copy of your most recent credit report!

How to get a car loan with bad credit

Is your credit or lack of it stopping you from obtaining a loan? Are you trying to figure out how to get a car loan with no or bad credit? There are ways to get around your lackluster credit store, so don’t be disheartened. The trick is to organize your facts and your credit history before you fill out the loan application. Many people make the mistake of filling out the application as soon as they realize they want or need to purchase a vehicle. This hasty decision is what results in rejection. Instead, following the next few steps to prepare yourself for the application process and reduce your odds of being rejected.

Check Your Credit Score for Free

First, know your credit score and your payment history. Check your documents and hold on to pay stubs, income tax forms, and bill receipts. Anywhere you borrow a loan is going to what to know this information. If you know it’s not stellar, work on improving it before you apply. Complete a credit report and note if there are any erroneous charges on your account. These can be removed if you can prove they are incorrect.

Nowadays, finding out your credit is a lot easier and free. If you use a credit card like Discover Card, they offer free credit reports. You can also go to the site Credit Karma and get a good sense of where your credit is at and ways to fix it.

Set Your Auto Budget

Secondly, set a realistic budget. New cars are expensive, so you may be better off affording a used vehicle or a CPO vehicle. Knowing your budget will help you set the terms of your loan. You will want to set up a realistic payment plan in regards to this loan so you can make your monthly payments on time and improve your credit score while doing so.

With a realistic budget, you can start saving your cash for a down payment. The more money you put down, the lower your loan will be.

Find a Co-Signer

If you are still worried about rejection, search for a co-signer. Even if your credit score is lower, having someone with better credit standing supporting your signature will raise the odds of loan approval. Remember, a co-signer will be held liable if you do not make your payments, so finding someone may be difficult. It is best to start the search now while you are in the process of improving your score.

Beware of Scams

Car salesman had a bad reputation. Even though there are some really great ones, there are a lot of dealers who are out to get a quick buck, without looking out for your best interested. A typical tactic is called the “Yo Yo Scam.” This is when the dealers sells you your car, but decides to finalize the contract at a later date. They say they are working on the numbers and will get back to you with the finalized deal. In turn, you go home with your brand new car and get a call. The dealer gives you some excuse and bombards you with the update that your interest rate has just doubled. At that point, it’s a lot harder to return the car.

Bad Credit Auto Loan Companies

After you’ve followed these steps, you may want to approach a lending service that specializes in loaning money to those with bad credit. Just be aware that your interest rates may be double than what they would be with a bank, so make sure you can afford the monthly payments in order to protect your credit score from getting worse.

As you begin the application process, cross-reference automotive loan quotes among the different lenders in your area. Choose the one that best caters to your needs and your budget. Look at each of their interest rates, monthly payments, APR financing, and any down payment requirements they have in order to determine if their loan fits in your budget. Do not be afraid to negotiate with your lender either. Bring in competitor’s rates and try to secure yourself the best, most realistic deal.

Once you have the loan in hand, you can start shopping around for a car. You now know how much you can afford, which will help you hone in on the car that fits your budget. Choose a reliable one with great value over any fancy bells and whistles. You may be limited to brands and dealerships depending on your lender, so remember factor that into your shopping list as well. When you decide on a car, make sure to have it inspected by a third-party mechanic to ensure all is in working order.

Remember, after you buy the car, make your payments on time and the full amount so you can improve your credit score and avoid this kind of stress in the future.

Another Piece of Advice When Searching for a Car With Bad Credit

Many people with no credit or bad credit avoid buying new cars. However, sometimes buying a new car is actually better when you have terrible credit. A big reason is since the car is brand new, the bank or the dealer can go after the car and it will be worth more than an older car. Also, since the car is new, the dealer or bank know that you will less likely have to pay money on repairs and maintenance. Remember, car dealers could sometimes break even on the sale of a car, but they can make a lot of money on the loan, so there is an incentive for them to sell to you even with bad credit. The more money down you can put down, the easier it will be.

Regardless of your credit score, there are ways to get the loan you need, when you need it most and finance a car — sometimes with little or no money down. Bad credit car loans differ from conventional car loans and are designed to work well for individuals with less than perfect credit, no credit or even poor credit.

The 4 Best Bad Credit Auto Loans

  • My Auto Loan: Best APR
  • Bad Credit Loans: Best marketplace lender
  • RoadLoans: Most flexible
  • Carvana: Best for all-in-one financing
Lender APR Min. Loan Max. Loan Terms
My Auto Loan Starting at 2.99% $8,000 $100,000 24–84 months
Bad Credit Loans 5.99%–35.99% $500 $5,000 3–36 months
RoadLoans Undisclosed $5,000 $75,000 24–72 months
Carvana Starting at 3.90% N/A* N/A* 24–76 month

*Carvana bases its loan amount on the price of the vehicle financed.

What is a Bad Credit Auto Loan?

Bad credit car loans are issued by subprime lenders, also referred to as “second-chance” lenders. If a borrower doesn’t qualify for a conventional auto loan due to poor credit history, then these lenders offer an alternative option. Bad credit loans have a higher tolerance and more flexibility for higher-risk borrowers in the eligibility criteria. However, they aren’t without their disadvantages.

Bad credit loans often come with higher interest rates. Yet, if you improve your credit score and pay your loan on time, then you may be able to negotiate a better APR later. Refinancing your car loan can also help lower your monthly loan payments.

One caution, though: your car acts as collateral to ensure that your loan is repaid.

Bad Credit Auto Loan vs Conventional Auto Loan

A bad credit loan is issued by a “subprime” lenders to borrowers with less than stellar credit. A conventional auto loan is just the opposite and is issued by prime lenders. This includes your financial institution, for example. Conventional auto loans are based on your credit history, your income and more. So, conventional auto loans offer a lower interest rate to qualified borrowers.

Many conventional lenders require a minimum credit score of at least 659 and sometimes higher. The higher your score, the better your APR and the more likely you’ll qualify, assuming everything else checks out. If your credit history is blemished, though, then a bad credit car loan might be your best option.

Bad Credit Auto Loan vs Personal Loan

A personal loan can also help you finance a car. Like conventional auto loans, they are dependent on your credit history. So, the higher your credit score, the better your chances of qualifying for a loan. A personal loan may still require collateral, though.

Bad Credit Auto Loan vs Credit Union Auto Loan

Sometimes belonging to a credit union can improve your chances of getting financed. You may be able to get a better rate and have more flexibility — even if other conventional lenders consider you as too high-risk. Credit unions are more positioned to serve you rather than a board of directors or stockholders. So, many often offer more flexibility with auto loan financing.

Some credit unions may still require a minimum credit score to help determine creditworthiness, but that’s not always the case. Some credit unions do not have minimum credit score requirements for their members. Hence, it might be a good idea to check them out.

The 4 Best Bad Credit Auto Lenders

My Auto Loan: Best APR

My Auto Loan offers a variety of auto loans for consumers including for new and used cars, auto refinancing, private party car loans, lease buyouts, and motorcycles.

It finances with terms ranging from 24 to 84 months and publishes a handy rate table that gives you a clearer picture of which rates you might expect. The lowest APRs begin at 2.89% for auto refinancing, 3.99% for new cars, and 4.24% for used cars. However, rates can change based on your credit situation and the market.

Bad Credit Loans: Best marketplace lender

Though not specifically a lender, Bad Credit Loans is a company that connects you with a network of lenders based on your needs and creditworthiness. APRs vary by lender, but start at 5.99% and go up to 35.99%.

You can borrow as little as $500 or up to a maximum of $5,000 with terms ranging from 3 to 36 months. So, there’s some flexibility when you don’t need a lot. The online form is fast and easy to use. If a loan is approved, you can generally access funds the next business day.

RoadLoans: Most flexible

RoadLoans does not specify its rates for car loans because each borrower and situation are unique and loans are customized according to your credit score, credit history, income and more. However, it offers loans between $5,000 and $75,000 based on your qualifying factors. Terms range between 24 months and 76 months. Determining whether you qualify with this lender is easy. Simply complete the online form and you’ll be notified of your eligibility details afterward.

Carvana: Best all-in-one financer

Carvana is a different kind of auto financing company that cuts out the middle man. The lender works with all credit scores and looks at the broader picture of your finances and credit history. However, instead of approving you for a specific loan amount, it approves you for financing one of the cars offered through the Carvana network, which is listed on its website. Even if the car isn’t local to you, the lender can ship it to the nearest Carvana vending machine, which is a nice option and gives you an expanded selection of cars and trucks to choose from.

Auto navigator is an online, AI tool that helps you find a car from a network dealer and then walks you through the application process to pre-qualify for financing. Finance restrictions apply, though. You must apply for a loan of at least $4,000. APR is determined by creditworthiness, but available terms range from 24 to 84 months, allowing you to personalize a loan payment that makes the most sense for your budget.

The Final Word

Although having bad credit doesn’t preclude you from financing a car, it does mean that you’re going to pay more in interest for your loan. It might be best to wait and pay down your debt to raise your FICO score and qualify for better rates. However, life happens and this isn’t always an option. Cars break down and sometimes the cost of repairing them outweighs the cost of replacement. In these cases, a bad credit car loan might be a good option to keep you on the road.