Can I Get a Bad Credit Car Loan?
Getting a car loan while having past credit problems may seem daunting, but it is entirely possible and common. Consumers who have had previous credit or financial issues which have resulted in lower credit scores are usually able to purchase a new vehicle.
However, not every car dealership and auto lender is equipped to work with credit-challenged borrowers. We helps thousands of drivers every day by connecting them to the lenders and dealers in our network that specialize in working with bad credit.
Preparing for a Bad Credit Car Loan
Once you’ve completed the online loan request form, there are a few steps you can take to put yourself in the best position possible when it comes time to visit the dealership and get your car.
- Know Your Credit Score: Having a solid understanding of exactly where you stand in the eyes of a lender will help establish expectations and provide insights into your financial situation.
- Understand Your Budget: A key factor in determining eligibility for a new loan is your current debt-to-income ratio. If you already spend as much as you earn on things like credit cards or other loans, it will be difficult to get you approved.
- Gather Your Paperwork: To finalize a bad credit car loan, the dealer will require some paperwork. This usually includes a pay stub or other proof of income, proof of residency such as a current utility bill, and a valid driver’s license.
How Bad Credit Affects Auto Loans
Borrowers with lower credit scores can expect to pay a higher interest rate, somewhere between 9% and 22%.
Options for which car you can buy may be limited to vehicles of a certain price, age, or mileage.
While zero-down options do exist, customers with lower credit scores usually need to provide a down payment.
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Good Credit vs. Bad Credit
Lenders offer lower interest rates, which decrease monthly payment and the total cost of the loan over time. Rates may be lower than 5%.
Interest rate will be higher, depending on credit score and other factors. Rates may be higher than 20%.
Loan term can range between 24 and 84 months, with 60 months being average for borrowers with higher credit scores.
Loan Term depends on monthly payment and affordability, with 72 months being average for lower-credit borrowers.
Financing may not require a down payment or any other additional provisions.
Additional approval requirements may exist, such as larger down payment or co-signer.