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Tips for Buying a Car with Bad Credit

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Car Loans With Bad Credit

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Buying a car with bad credit is possible—it’s just going to cost you. You’ll probably have a higher interest rate and require a bigger down payment, and you may have a much smaller selection to choose from than someone with a better credit history.

Here’s how to go about buying a car with bad credit and what you’ll need to be aware of to avoid being overcharged.

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    Buying a Car With Bad Credit

    If you have poor or bad credit, buying a vehicle requires some common steps that people with good credit don’t necessarily need to worry about. Consider taking these steps when buying a car with bad credit.

    1. Check Your Credit

    If your credit is poor, you may be stuck paying a higher interest rate until you can improve your credit scores. Your credit score is a huge factor when it comes to the interest rate and credit financing you will receive for your auto loan—or if you’ll be approved at all. You’ll want to go into this process knowing what your score is and what your options are.

    Check your credit from all three major credit bureaus several months before you begin your car shopping journey so you have time to rebuild your credit if possible. Track your credit history to determine the areas where you can most improve before applying for a car loan.

    2. Improve Your Score

    There is no official minimum credit score you need to buy a car, but a higher score will open up more options and better rates. According to Experian, the average credit score for used car purchases at the end of 2018 was 659.

    If your score is below 660, look for ways to improve your score before applying for a car loan. Your free Credit Report Card from will help you determine the most efficient ways to improve your score: paying off debt, clearing up errors or taking care of old collection accounts could bump you over that coveted 700 threshold. Delaying the car finance process to improve your poor credit score and rebuild your credit can save you money in the long run.

    3. Fix Credit Errors

    If you find mistakes on your credit reports, fixing those errors could bring your score up quite a bit. If possible, give yourself at least 30 days to dispute credit report mistakes before you start car shopping and looking for an auto finance company or submit a loan application. If you think this is your best option, you can try DIY credit repair, or work with a credit repair service such as those from Lexington Law.

    4. Know What You Can Pay

    Whether or not you’re able to improve your credit score, you should know what you can afford to pay before you start shopping—and stay committed to your budget. Auto loan calculators are helpful tools to use when you are trying to determine how much car you can afford. These calculators can also provide you with an estimate of what you will be paying for the entire term of the auto loan, interest included.

    〉 Try it now: Auto Loan Calculator

    5. Make a Bigger Down Payment

    If your score is still on the low side and you don’t have more time to rebuild your credit before purchasing a car, be prepared to put a large chunk of money down. If you’re able to put down more money, you can borrow less money—which will usually mean more savings overall. How much you have to put down on a car with bad credit depends on how low your score is (and why) as well as the price of the car and the dealer you’re working with. In general, at least $1,000 or 10% of the purchase price is recommended.

    If you’re unable to put any money down, your options will be severely limited. You may be able to buy a car from a private seller who is willing to take payments, but this scenario is unlikely.

    6. Get a Shorter Loan

    Longer loans are generally considered a higher risk: there’s more time for you to potentially default on the loan, so the interest rates tend to be higher. The monthly payments will be higher for shorter loans, however, so make sure you are able to fit this into your budget with some room to spare.

    7. Work with a Bad Credit Car Dealer

    If you need a car now and have a credit score that falls below the 600 range, you may need to go to bad credit car dealerships that specialize in no-credit or poor-credit buyers. These dealerships will work with your credit history to get approval, but interest rates will likely be high and terms may be unfavorable.

    8. Get Preapproved

    Getting preapproval for auto financing from a bank or credit union could better prepare you for the car shopping process. This preapproval process analyzes your income, expenses, credit score and credit report and determines if you qualify for an auto loan from the lender and how much the lender would be willing to lend. Submitting your paperwork early and learning what obstacles you face could spare you a lot of headaches later when going through the loan approval process.

    9. Get a Co-signer

    If you have a poor credit score, it may be helpful to get a co-signer for your loan application. Not all lenders offer this option, so consider this carefully before moving forward.

    10. Comparison Shop

    Always shop around for your loan. You never know what options are available until you look. Look for the best possible terms and make sure that you can actually afford the payments so you don’t end up negatively affecting your credit even more. It’s also a good idea to compare rates from other lenders like banks or credit unions before settling on a loan straight from the dealership.

    11. Read the Fine Print

    The fine print can make a big difference in the overall purchase price of the vehicle, especially if your credit means a high interest rate. Make sure there’s no prepayment penalty so you’re not fined for paying off a loan quicker than agreed, and avoid pricey add-ons that increase the sales price.

    12. Refinance

    Auto loan refinancing could help lower your auto loan rates and your monthly payment, which could end up saving you hundreds over the life of the loan. For loan refinancing, you typically want a strong history of making on-time payments for at least 12 months. However, keep in mind that the loan refinancing will also take your credit history and current credit scores into account as well. So, as always, continue working diligently to improve and rebuild your credit rating.

    Key Takeaways

    Whether or not you can get a car loan with bad credit depends on many factors. If you follow these tips, you may be able to get an auto loan and save money even with poor credit scores.

    You can view your credit score and get an easy-to-understand Credit Report Card for free at or via the mobile app for iPhone and Android. Start by taking a look at what factors are having the most impact on your scores and credit rating so you know what to address first.

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      • rrdoucette

        My current vehicle is about to take a turn for the worst. It’s on its last leg. So I need to get a newer vehicle. But my credit is horrible. If it is possible to get a auto loan with bad credit then why is it so hard to find some one willing to approve you. I followed all the advice on this web page and was immediately denied at the very first place I went to. It’s very discouraging and shamefull to be rejected. So what should my next move be? Do I just keep trying different places or should I follow some sort of guideline? I can easily afford a car payment so I know the credit score is the only real obstacle in my way. No cash down! Any suggestions what I should do next would be greatly appreciated. Please help!

        • Gerri Detweiler

          I am sure it’s incredibly frustrating. When you were turned down you should have received a notice stating your credit score and the main factors affecting your score. What did that letter say? Where did you apply?

        • Jennifer Gottfried

          Use some of that money to pay balances down on your credit cards. The lower debt to income ratio will significantly improve your credit (it’s about 35% of your score I believe). Even 10 points can make a difference as far as getting approved. You can also call the dealer and ask what kind of score or credit you need to get approved, and maybe even ask to bring in a copy of your report and meet with their finance person and they can give you tips about what to pay down or off in order to be approved. But be clear that it is only a meeting and you are NOT CAR SHOPPING that day. Don’t get tricked into applying for a loan that day for a car without doing lots of research first. Walk away if they won’t talk to you without agreeing not to sell you a car that day and go to another dealership.

        • Earl Kelly

          I have sold autos for 35 years. Your situation is not new it is like 9 out of 10 people I see everyday. They can make the payment but have no money down. Fact is only people with great credit get offered no money down deals. so don’t let them run your scores it will only make it lower in the end. buy here pay is typical avg 1-2 grand down those who advertise lower will not be including tax tag and title in the dwn pmt, so that would come due in 30 days along with your first payment. buyer beware, its just fact if you have bad or no credit you have to have a down payment

      • starsprt

        I bought a car new eight years ago with a chapter seven bankruptcy filed one and a half years beforehand. The additional interest came to twelve thousand dollars over the coarse of the seven year loan. I didn’t like the fact that my TRW Reports did not reflect the total amount that I paid. Also the payments toward the end of the loan did not match what I paid. When I went to the car dealership to ask why they did not show the total amount in full that I paid after pay off. Their reply was that it would have looked bad for me on my TRW Report that I paid that much for the car. It troubles me that some of these institutions can do what they want with regards to my credit reports.

        • Gerri Detweiler

          They can’t do what they want. If they are willfully and knowingly reporting wrong information they may be violating federal law. It sounds like you paid this off fairly recently. I’d suggest you either talk with a consumer law attorney or file a complaint with the Consumer Financial Protection Bureau.

      • Gerri Detweiler

        I’m curious – what have you done to rebuild your credit since your bankruptcy? Do you have other current positive credit references?

        • Jeffery Surratt

          I have eight credit cards with interest rates from 15%-25%. Credit limits from $500 to $2250. I also have a fingerhut account with a limit of $2770. Current balance $214 down from $1400. I always pay more than the minimum payments. Current credit use is at 70%. I have been turned down for a $800 no interest loan from a program through a local bank to replace a gas range. I will continue to pay down my debt, but will not be applying for any more credit until the bankruptcy is off my report in 2017. I would warn people to watch who you allow to try to get you a car loan. One dealership ran 5 credit aps and my score dropped 25 points.

          • Gerri Detweiler

            Ah, I get it now. Unfortunately, those high debt usage ratios are definitely hurting your scores. But if everything is paid on time and you are able to get those balances down, then it sounds like you should see some significant improvement even with the bankruptcy on your reports.

      • Credit Experts

        What are your questions?

      • Gerri Detweiler

        Why don’t you talk to a credit union? At least you can get some advice up front before you start talking to dealerships. (My concern at the dealer is that they will shop your loan with multiple lenders which could create problems for you.)

      • Robert Wyatt

        pay cash, don’t borrow, EVER!

        • Herp Derpington

          Because that makes sense in the real world.

          • matt pike

            If you have to borrow for something as temporary as a car, then you are living above your means. It’s a car, not a house!

        • Nerissa

          Never borrow!

        • Blaidd Gwyn

          I’m glad you have $10,000 cash just laying around to be able to go buy a large-investment item such as a car with cash. I however do not, but I do have income to pay bills. I need a reliable car to keep receiving the income, so a $1000 car found for sale on the side of the road is out of the question. So… I’m just screwed then because I don’t have half a year’s salary just tucked away in my mattress? I agree, it is ideal to never have to borrow money… it is not very feasible though.

      • dave

        I had a bankruptcy discharged 01/14/2014 – how soon can I finance a new car

        • Gerri Detweiler

          You can probably get one now – but you’ll pay a much higher rate. Be careful – if you go to the dealer you may wind up with multiple inquiries on your credit reports. You may want to try your bank or a local credit union first.

      • Jerry

        if I check my credit report once a month with will that inquiry show up on my credit report and will it hurt my credit rating?

        • Credit Experts

          It will not. Checking your own credit doesn’t affect your score, but having credit checked for purposes of extending credit does. You can read more here:
          Does Checking My Credit Score Hurt My Credit?

      • Rose

        I was in a serious auto accident & totaled my car the insurance paid all off but the $1,000. deductible. I spoke w/finance company after accident and stated that my attorney said deductible would be paid in settlement of my claim. Never heard from them again and received NO phone calls or letters. While checking my credit report, I noticed that finance co put on my credit report a charge off for said amount. i am so frustrated now and I do not want to pay them b/c that charge-off will always be there on my credit report even if I pay it. Is there anything I can do?

        • Gerri Detweiler

          That is incredibly frustrating. First, have you talked with your attorney about it? If he or she can’t help you may want to try to file a complaint with the Consumer Financial Protection Bureau.

      • michelle

        My car just died. Our credit was murdered when my hubby had a stroke 2.5 years ago. Our mortgage became 6 months delinquent…the same as his hospital stay. he is now permanently disabled. I have been his caregiver since then, but have been searching for a job in my profession (real estate). I must have a decent car! i have found one in the 5k range. Is there a way to tap into my home equity? my payments have been on time now for over a year, and we have 30-50% equity in a house valued @ 375k. or more.

        • Credit Experts

          Michelle —
          We’re sorry to hear about your husband’s health challenges and the resulting financial ones.
          You can check with a bank or credit union about a home equity loan or line of credit. But be aware that you would be putting your home at risk to finance a car, and think very carefully about whether there’s an alternative.
          Do you know your credit score? (Here’s how to monitor your credit score for free.) We strongly recommend keeping an eye on that. (It can also alert you to potential identity theft and help you put a stop to that sooner, when there is less of a mess to clean up.)

          Good luck to you.

          • michelle

            I am only considering this alternative because if i dont drive, i cant work. no work no pay , no pay, no house anyway..
            Also i am only considering a small loan… $6k~ keep payments to about $125. This will be my first time financing a car. my husband and i decided long ago to pay cash for everything except real property. i hate the idea of financing personal property, but i hate the idea of not being able to afford our mortgage worse!
            i just hope i can find a loan… somewhere. i cant even get to the bank lol, because i have no wheels! i will call them, i guess.

        • Biff Tannen

          you should first look at getting a lot cheaper house and smaller mortgage with only one income going forward

      • Meg

        Hello, I just need some advice I think. We are currently driving a minivan with 230,000 miles and are in need of a newer vehicle. My credit score is terrible (400s) and my husband’s is around 590. We are self employed and have been for over a year now. We are paying down our 2 credit cards and have 100 percent on time payments. What is the chance we would get approved for a car and what would we need to do because we are self employed? This year is our first year filing taxes as a business (we pay quarterly taxes though).

        • Gerri Detweiler

          It’s going to be tough. Those are very low credit scores and the fact that you are recently self-employed will make it more difficult. You will likely have to pay a higher interest rate until you improve your credit. One option you may look into is assuming someone else’s lease for a year or two while you do that. (But you’ll have to qualify there too.) Do you belong to a credit union or bank with a local community bank? You may want to start there.

      • Biff Tannen

        having high credit card balances after a Bk is probably hurting you more than the BK itself after 7 yrs. i was able to get a reasonable rate car loan 2 yrs after a chap 7 BK and bought a house with zero down 5 yrs after the Bk was discharged (That was before zero down loans disappeared)

      • Biff Tannen

        You have to be able to find a cosigner with a good credit rating that understands and accepts the risk that cosigning a loan will affect their own ability to get future loans and if YOU mess up, it affects their credit also.

      • Des

        Hi, my boyfriend & I are looking to get our first car together. The problem is, he has a terrible credit score (400s) Because of student loans & I have no credit because I just graduated. We’ve tried everywhere & We’ve been searching like crazy. Every bank that is supposed to help with financing for bad credit has denied him, all we need is a loan, we have money. He makes $1500 a month & I make about $2500. What are our options? I’ve tried to apply for a credit card to build my credit through my bank but I haven’t gotten a response yet.

        • heavyw8t

          This is really simple. DON’T DO IT!! If he didn’t pay bills before that he has a score in the 400s, why do you think he will suddenly become responsible and pay you? Boyfriends come and go. His anticipated failure to pay for this car will stay on your credit report for several boyfriends to come. Or you will end up eating the loan to prevent the bad credit item and essentially buy him a car. DO NOT cosign for anybody. Ever.

          Also consider that if he has a history of not paying bills, is that car going to stay insured? If not, you will be on the line for any accidents he might have. Just don’t do it.

          Whether you “make money” or not is irrelevant. Remember that you also spend money. Possibly you spend more than you should. There is a reason he has a 400 credit score. Should you ever marry, your credit will be affected by his. I would sit down and have a frank discussion about his finances and gently suggest that he work on raising his scores. The blogs on contain a gold mine of great information on everything from how to check your credit report for erroneous information to setting up a budget. I raised my score by close to 100 points in 15 months by being responsible, setting up a budget, and following it without diverting. Most, if not all, of what I learned came from these blogs. If this is potentially more than a casual boyfriend and you think you may have a future together, this discussion has to happen before you would marry. Money is the most prevalent thing couples fight about. You can avoid that by discussing it now, setting up a plan, and putting that plan in motion, and most importantly, having the discipline to follow it. You may have skip “pizza and a movie night”, but that $50 you spend on that night, if you do it every week, is $200 that could go toward paying bills and recovering from whatever put him in the 400s.

        • matt pike

          If he’s making $1500 a month, then he has no business buying anything over 2 grand.

      • Gerri Detweiler

        You have to talk to a lender or dealer to find out what they would require. There are many different programs available.

      • Gerri Detweiler

        You might be able to get something but the interest rate is probably going to be very high in the car probably isn’t going to be very good unfortunately…

      • Jim

        Just found a job after two years of unemployment, now making about $9200 a month (went back to a former employer) but during my unemployment I had to file for BK and it should be discharged within the next two weeks. My credit score with Transition and Exquifax went from 580 to 711 after the public records were posted to my reports. What are my chances of getting a car loan with my monthly income? I’m sure my interest rate will be higher than normal but how much higher?

        • Gerri Detweiler

          I am not sure I quite follow–your scores are now at 580 or 711?

          First, I would suggest you wait until your bankruptcy is discharged. Secondly, it appears that you are now making a very high income and probably have little or no debt. So can you buy a used car for cash and drive it while you work on your credit? It might be preferable to getting into a very expensive car loan.

          (I don’t know what rate you’d be charged but if your scores are in the 500’s it will be high, at least until you bring them up.)

          • Jim

            My credit score went from 580 prior to BK to 711 after the BK hit my credit report. Hope this clears up any misunderstanding.

            • Gerri Detweiler

              Ah so it’s 711 now? Depending on which model is used by the car dealer you may be able to get a decent rate. You may want to talk with a local credit union or community bank. Just be careful about letting a dealer shop your loan as that could create an issue with inquiries.

      • courious

        ?I have never had taken out a loan. how do I start? I don’t think I even have any credit

        • Gerri Detweiler

          You can try to get your
          free annual credit reports. If you have any credit history, you will be successful. If you don’t have any credit history and have the time to build some credit I would suggest you consider starting with a secured credit card.

      • ethan

        I am looking to finance a used car and have a credit score of about 687. However, I think it is considered limited credit because I just have two credit cards. The first I have had for a little over a year with a limit of $2,500 and a $1,400 balance. And the other was just opened last month with a $2,500 limit and a $350 balance. Besides for that I don’t pay any other bills or have any loans. Is my best option a credit union,co-signer, or something else?

        • Gerri Detweiler

          I’d suggest you start by trying to get a loan preapproved with a trusted lender such as your bank or local credit union. You may be pleasantly surprised. Before you start looking at alternatives see what you qualify for now.

      • Sincoles

        Hey I’m 22 years old male ..When I was 18 I got a few credit cards I owe about 2,000 all together (walmart $250, Bank of America $500, Westherr 1,200 (New tires )and I brought a new car but got in a accident b4 car was completely paid for car cost $13,000 but after lian fees and taxes loan was $15,000..when car was totaled Insurance company paid $10,000 left me with a debt $5000..So all together I’m about 7, 000 in debt and haven’t had a new car or credit card or nothing in my nane in 2years..I have a decent job now and need a new car but I want to build my credit at the same time..not monthly living expenses about $700 a month but I bring home about 2 grand where should I start Im a member of a credit union..I’m older wiser and trying to do better! Oh shoot I forgot I owe my school additional $2, 000 but I’m still in school

        • Gerri Detweiler

          Have you talked with the credit union? Many of them have financial counselors who can help you put together a plan. If not, you may want to talk with a reputable credit counseling agency that should be able to help you do that. Another option might be a consolidation loan so you have one debt with a fixed monthly payment and a debt-free date built in. Learn more here: Debt Consolidation: The Pros and Cons of Your Major Options

      • Barry Wisell

        Hi I’m looking to replace my 1998 Saturn with a new or slightly used vehicle. Had to file for bankruptcy in 2009 and I’ve had no credit cards since then. I do own a home that I have been paying for since 2002 never missed a payment. Found out my credit score is a right around 700. What’s my chances on getting a car loan because the Saturn is about to die.

        • Gerri Detweiler

          I can’t imagine you’ll have too much trouble. That’s a
          good credit score and your bankruptcy is well behind you. My suggestion is to get preapproved with a trusted lender before you start shopping.

          • Barry Wisell

            Thanks Gerri, I appreciate the feedback.

            • Gerri Detweiler

              Let us know what happens!

      • Tyrus

        Looking to finance a used car. After tax, tags, title, etc. it’s just under $10,000. I’m looking to put between 2000-2500 down. My credit score as of my last inquiry is 691. First time financing a vehicle. Should I finance through the dealer, credit union, bank (wells-fargo)???

        • Gerri Detweiler

          Your score doesn’t sound terrible and you have a good down payment. We would recommend you get preapproved before you go to the dealership.

      • Alicia

        I have bad credit as result of my ex husband opening accounts in my name. I own my home and have about 60,000 worth of equity in it. Where can I find a loan to wipe out all of the debt which is about 39,000?

        • Credit Experts

          Alicia —
          Without information on income, credit, debt obligations, etc., it would be hard to know. First, have the accounts that hurt your credit been closed? (Second, if the accounts were opened without your knowledge or permission, you might want to see a lawyer.) It sounds as if you are thinking about a home equity loan. If that is the case, keep in mind it would be trading unsecured debt for debt secured by your home. Before you apply for anything, we hope you’ll check your free annual credit reports for accuracy and dispute any information that is incorrect. Here’s how to monitor your credit score for free.

      • Preston White

        My dad got a car from CarMart and added my name on it to build my credit. Well I went to a major car dealership to get a new car but I was told that as long as my name was on the other car I couldn’t get it. Is there anything I could do? One car salesmen told me to do a voluntary repossession?

        • Gerri Detweiler

          A voluntary repossession is extreme and you probably won’t get a car loan after you do that! Have you talked with your father and asked him if he can refinance the car in his own name to remove you from the loan?

      • nate

        According to I have an excellent credit score, could it be wrong? I know i have some negative things in my credit history by I do have some good things as well… I’m curious because I’m honestly really surprised myself at how good they say it is.

        • Kali Geldis

          Hi Nate —

          If you know you have a few negative things on your report, they could have aged off and are no longer considered for credit scoring purposes. The data of’s credit scores comes from your Experian credit report. You can pull your credit report from each of the major credit reporting agencies (Experian, Equifax and Transunion) once a year at (it’s the government-mandated site). You can read more about how to check your credit reports for free here:

          Update us if you find anything interesting!

      • Justin Jacob Elizalde

        Hi, my name is Justin and I’m fairly new to the whole car buying scene. In 2014, I co-signed for a 2013 Hyundai with my grandmother but I returned it a little less than a month later because I lost my job. They paid off the account, but when I went to get a car, they denied me by myself, so my parents had to buy me one, I lost that one in a car accident but now looking at my score, it’s dropped over course of two years from a 610 to a 541. But I don’t have many things affecting my score. I have 26 inquires, which I know affect me but I only have my one credit card, which I did miss two payments on but it is back to current again, and my student loans which haven’t begun to charge me. I have some hospital bills and one account that was supposed to be taken off but hasn’t but I don’t understand how it’s dropped significantly. I know that if I go to a dealership they are going to have me sitting there for hours just to deny me but how can I get back to a better score? Or should I just stick to “Buy Here Pay Here”?

        • Gerri Detweiler

          I guess the question is whether you can wait to get a car until you get your credit back on track or do you have to have one now to get to work or school? If you can wait then building up your credit makes sense, or you’re likely to get stuck in an expensive loan. Do you have to get another vehicle right away?

      • debbie

        I cannot come up with the downpayment right away and I have signed papers for the car and am now driving it. I have insurance on it and am just waiting for the welcome call from the financing company. What should I do?

        • Gerri Detweiler

          I am not sure what you are asking. Have you talked with the lender to see what your options are?

      • Adrian

        Hi ! I’m new to the USA , no credit score what’s so ever , no down payment , but I have a co-signer … can I get an auto loan like that ?

        • Credit Experts

          Adrian —
          If the co-signer has sufficient credit and income to accommodate it and is willing to sign, you may be able to. You can read more about co-signers here:
          Using a Co-Signer: What You Need to Know

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