Auto loans when you have bad credit

Auto loans when you have bad credit

Is your credit perfect? Yeah, neither is most people’s.

Buying a car or getting an auto loan when you have bad credit* can be challenging, but the best way to approach it is simple: know what you’re getting into.

Many people with bad credit get auto loans every day, and the question is simply, “How?”

And this is where it helps to know what you’re getting into. It might not be difficult, but there are steps that should be taken.

First, it’s important to understand your own expectations. Are you expecting to get your dream car for a bargain? It might happen, but probably not. If you think you have bad credit, then you may fall into a category that lenders call “sub-prime” which literally means “below the first” and could be expressed as “less than average.”

If yours is sub-prime credit, then you probably won’t qualify for the most dazzling loan offers. The offers that lenders extend to you may have any or all of the following: a higher-than-average interest rate, a larger-than-average down payment, a balloon payment or a very long loan term.

It’s important to be practical, because you can be certain that your potential lenders are being practical. In fact, the way that a loan is put together, or “structured,” is sometimes tailored specifically for your needs.

For example, if you have a low credit score and your lender subsequently sees you as a risky borrower, and you have a low income, then they might structure a loan that lets them meet all of their lending criteria, but still offer a low monthly payment. This usually means that something else is being given up, such as having a higher overall interest rate or a longer term, so that they can balance the risk of lending to you.

Approach the situation with realistic expectations, and you are less likely to be confused, surprised or derailed in the process by offers that may at first seem unfavorable.

It helps to go with a lender that is “full-spectrum” and has experience in structuring loans for people with excellent credit, less-than-ideal credit, and everything in between. Full-spectrum lenders, like RoadLoans, have a full range of offers, and a wide set of tools available to structure loans to meet the car-buying needs of almost any situation, especially car loans for people with bad credit.

Bonus Tip: You might be looking at your current car and thinking, “These payments just aren’t making me happy about owning this car.” That is perfectly understandable. Consider refinancing your current car. If your refinanced loan is much more favorable to you than your current one, you might feel happier about driving it.

* “Bad” or “Poor” credit generally is considered a FICO score around 600 and below by sources including the Consumer Federation of America and National Credit Reporting Association (reported by the Associated Press),,, Investopedia, and others. The Congressional Budget Office identifies a FICO score of 620 as the “cutoff” for prime loans. FICO scores are not the sole factor in lending decisions by and Santander Consumer USA.


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