How to get a car loan with bad credit


8 Steps to getting on the road despite poor credit history

How do you make the best of a bad credit* situation when you need to buy a car?

Poor credit may pose some unwanted challenges but there are many ways to maximize your chances of getting approved for an auto loan, and a competitive rate for your circumstances.

Here’s how to approach it in eight straightforward steps.


1. Know what to expect

It helps to know up front that consumers with bad credit typically encounter higher interest rates than those with better credit and so, if approved, face paying more for their money.

If buying a car now is a necessity, why not turn yourself into a savvy shopper to enhance your prospects of getting the best deal possible?


2. Check your credit to put your best foot forward

This is a solid foundation for the car-shopping process, and one that’s recommended by the Consumer Financial Protection Bureau (CFPB). The loan decisions of auto lenders are generally based, in part, on credit scores, which take into account a consumer’s credit experiences, compiled in credit reports. Check your reports with the major credit bureaus for errors or inaccuracies that might prevent a lender giving you the best rates for your situation.


3. Work out what you can afford

Before you apply, think about what you can afford and what the right loan for your budget looks like. Here are some points to consider:

  • The monthly payment is at the front of many people’s minds during the auto financing process. RoadLoans’ car payment calculator will help to estimate that figure. But don’t get fixated on the monthly payment, advises the CFPB. Also think about what you will pay for the vehicle in total including financing charges. A longer loan term may lower the monthly payment but also result in paying more for the vehicle over the life of the loan when interest is taken into account.
  • An affordability calculator allows you to gauge what you can pay for a vehicle in total. The total loan amount (and monthly payment) will be affected by whether you can reduce what you need to borrow by trading in a vehicle or putting money down, or both. Buying a car with bad credit may mean the lender asks for a minimum down payment. Money down for new and used cars averaged 12 percent in 2017, according to Edmunds, and the larger your down payment, the more you may save on financing costs.
  • While you’re planning ahead, give some thought to whether you are interested in add-ons such as extended warranties, service contracts and GAP coverage. Financing these products will increase the cost of your loan.


4. Find a suitable lender

Figuring out how to get a car loan with bad credit becomes a lot easier when you find a lender that accepts applications from people with poor or limited credit histories. The main options include auto dealerships, banks, credit unions and finance companies. Consider lenders that accept applications from consumers with all credit types, such as RoadLoans.


5. Shop around, within 14 to 45 days

Shopping around for auto loans enables you to compare what different lenders may offer you. A word to the wise: Do your shopping within a timeframe of 14 to 45 days to avoid potentially damaging your credit further. When you apply for a loan and the lender checks your credit, a credit score is created. In some cases, applying for multiple loans over a long period can lower your score, says the CFPB. But, depending on the credit-scoring model used, inquiries within the 14 to 45-day period will count as just one inquiry.


6. Try for preapproval

Between finding the right vehicle and arranging the right financing, there’s a lot to think about when buying a car with bad credit, especially if you’re doing both at the same time at the dealership. Getting preapproved for an auto loan before you go may relieve that stress. Preapproved buyers can shop already knowing the terms of their financing, and focus on negotiating a good price for their car.


7. Getting a cosigner or co-borrower may help

Applying with a creditworthy cosigner or co-borrower may improve your chances of getting approved for a loan and, if approved, better your terms. A cosigner, who may be a family member or close friend, provides additional assurance to the lender because they are obliged to meet any missed payments or pay back the loan in full if the borrower fails to do so.

Adding a co-borrower (also known as a co-applicant) means you’re applying for a joint auto loan, with equal rights and responsibilities. How does this help? There is a range of factors, and increasing the available income to repay the potential loan is often a major one.


8. Negotiate your position

Just because your credit is not perfect doesn’t mean you have to settle for a poor deal. You may be able to save money by negotiating a number of terms connected to an auto loan, including the interest rate and annual percentage rate, length of the loan, whether there is a prepayment penalty (should you want to pay off the loan early), and other additional loan fees.


A quick-and-easy financing process that puts you in control

RoadLoans is a trusted direct lender that accepts applications from consumers with all types of credit, including those considering how to get a car loan with bad credit.

Our simple, secure online application takes a few minutes to complete, and you’ll get an instant decision. Approved applicants receive multiple offers tailored to their unique car-buying needs, and options for where to shop for a high quality vehicle.


Where to buy a car when you have bad credit

Bad credit might give you reservations about finding a good vehicle but, with RoadLoans, it need not be a concern. If approved, we make it easy for you to shop for great cars, trucks and SUVs that meet our standards for age, mileage and financing, regardless of your credit profile. Just download your loan documents and visit your dealer listed nearby, or use our dealer locator to find other options within our network of 14,000 preferred auto dealerships nationwide.

Poor credit is not ideal, but don’t assume it prevents you from getting on the road and on to what’s next in life. Understanding how to get an auto loan with bad credit is your first step.

Apply for a car loan online.


* “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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