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Can You Get a Car Loan With Bad Credit?

4 minute read

By Christopher Brown

As much as you might love being prepared for everything, life happens. Let’s say you just accepted a job one town over, or you had to say goodbye to the sedan that helped you through college. You never really know when you the need for a new or new-to-you car might arise.

Most Americans don’t have an extra $25K lying around, which is why a lot of them need auto loans. Securing an auto loan isn’t always easy either. Just ask someone with bad credit. While it is true that bad credit can make things a little more complicated, securing an auto loan is far from impossible.

Shutterstock: Cast Of Thousands

Credit Scores 101

Before they agree to finance a car purchase, lenders look into a potential buyer’s work history, and income statements. They check a person’s credit score too. A credit score uses a person’s bill-paying history, available credit limits, and current unpaid debts to determine their credit behavior and overall debt reliability.

Though the precise valuation of each credit score number can depend on the lender, credit scores are generally interpreted in the following way:

The average auto lender looks for credit scores of 660 and above, though they do still lend to those with lower scores. The first step to securing a loan then, is to figure out your credit score. If your score is lower than desired, you can still try to secure a loan from one of the lenders listed below. Or, you can take your time to clear some debt and boost your score.

Other Key Factors

The car loan story doesn’t end with a credit score. Banks ask a lot of questions, and require specific documentation to be submitted along with your application. You’ll want to check-in with your lender to be certain of their requirements, but the list of key factors below should help get you started.

Proof of Identity

Don’t expect to secure financing for a new vehicle without the proper documentation. A driver’s license or a passport should be enough to verify your identity. A piece of personalized mail with your current address and name on it should be enough to prove your place of residence.

Proof of Income

Banks use things like pay stubs and work history to assess everyone that applies for an auto loan. A steady job could help offset a negative credit score. Either way, don’t forget to pull together copies of your most recent pay stubs, or for self-employed borrowers, your tax returns from the past two years.

Know Your Budget

The bank is going to weigh your annual income next to your yearly expenses to see if you can reliably pay off your debt. You should know what you can reasonably afford. So get out a pen or use your budget app of choice to get a better grasp on your finances and protect yourself from getting carried away and spending too much.

Never Underestimate The Power of Down Payments

Overlook the importance of down payments at your peril. Even people with good credit should consider offering up as large of a down payment as they can afford. More than just a formality, down payments will save you money in the long term by reducing the size of the loan, lowering your monthly payment, and improving the term length and interest rate.

The Best Loans for People With Bad Credit

The lending market is more competitive than you might think. As a result, there are countless car loan options available for borrowers with bad credit. To start your search for a great APY on a car loan, we’ve highlighted a handful of notable options below:


Consumers Credit Union




This is just the tip of the iceberg. Believe us when we tell you that there are lots of online alternatives available. Add to that whatever local banks and credit unions that serve your area, and there are almost too many lenders to choose from!

Green Means Go!

See? There are a lot of car loan options available for those with bad or poor credit. And even if you can’t secure one right away, there are clear steps you can take today to improve your credit over time.

Securing a great rate on an auto loan doesn’t give you the green light to overspend on a new car. The higher the cost of the vehicle, the more you’ll pay over time. So stick to your budget, offer up as large of a down payment as you can afford, and get back in the driver’s seat.

Christopher Brown



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