How to get a car loan with bad credit



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

Poor credit may pose some challenges but there are many ways to maximize your chances of getting an auto loan that’s right for you.

  1. Know what to expect

    • It helps to know upfront that consumers with bad credit typically encounter higher interest rates and so, if approved, face paying more for their money than those with better credit.
    • 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 reports 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).
    • Checking your credit reports with the major credit bureaus enables you to see any errors or inaccuracies that might prevent a lender giving you the best rates for your situation.
    • The decision processes used by auto lenders are based in part on credit scores, which take into account a consumer’s credit experiences, compiled in credit reports.
  3. Find a good lender

    • Figuring out how to get a car loan with bad credit becomes easier when you know your options. Finding a lender that accepts car loan applications from people with poor or limited credit histories is of course a good start. The main options include auto dealerships, banks, credit unions and finance companies. Consider lenders that accept applications from consumers with all credit types, like RoadLoans.
  4. 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 of time 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.
  5. 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 may relieve any stress this causes by enabling buyers to shop already knowing the terms of their financing, and focus on negotiating a good price for their car.
  6. Work out what you can afford

    • Before you apply, think about what you can afford and what kind of loan will work for your budget. Here are some points to consider:
      • What the monthly payment will be 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. Think about what you will pay for the vehicle in total including financing charges. A longer loan term may lower the monthly payment but might also result in you paying more for the vehicle over the life of the loan when interest charges are taken into account.
      • An affordability calculator allows you to gauge what you can pay for a vehicle in total. Both 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. Buying a car with bad credit may mean the lender asks for a minimum down payment.
      • 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.
  7. Getting a cosigner might help

    • Borrowers may improve their chances of getting approved for a loan, and improve the annual percentage rate (APR) a lender might offer, if they apply with a creditworthy cosigner, according to the CFPB.
    • A cosigner, who may be a family member or friend, enters into the auto loan contract along with the primary borrower and is obliged to meet any missed payments or pay back the loan in full if the borrower fails to do so.
  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 different factors connected to an auto loan, including:
      • the APR and interest 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


The RoadLoans route

RoadLoans is a 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 online application takes a few minutes to complete, and you’ll get an instant decision. Qualified applicants receive multiple offers tailored to their unique car-buying needs.

Finding a quality car when you have bad credit

Bad credit might give you reservations about finding a quality vehicle. If you’re approved with RoadLoans, we make it easy for you to shop for great cars, trucks and SUVs regardless of your credit profile. Just download your loan documents and visit your recommended dealer 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’s the end of the road when you’re looking to buy a car. Understanding how to get an auto loan with bad credit is your first step.

Apply for a car loan and get an instant decision.


* “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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