7 Tips to Help You Get Approved for an Auto Loan

Get Car Financing
Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - January 2, 2019

The definition of good credit and bad credit constantly changes. According to Experian, the current credit scores that qualify someone for a prime rate auto loan (as opposed to a nonprime or subprime interest rate) are between 661 and 780. If you're not in that credit range, don't worry, it doesn't mean you're out of luck for a car loan.

Auto Loan Options

Having a lower than average credit score means that you can expect to pay a higher interest rate than someone with better credit, but having bad credit doesn't count you out for an auto loan. Typically, when you have poor credit, or have been turned down for a loan in the past, the easiest way to get financing is by applying with a subprime auto lender.

These lenders rely on factors in addition to credit scores to approve you for a car loan. Even though you're more likely to qualify for financing through one of these lenders, there are plenty of things you can do to improve your chances of getting approved for an auto loan.

Tips to Help You Get a Car Loan

Let's take a look at seven auto loan tips that can help:

  1. Know your credit – This means knowing your credit score, and getting copies of your credit reports. Knowing where your credit stands keeps the ball in your court when you begin looking for an auto loan. When you know your credit score, you can check the average interest rates for other people in similar credit situations, and you aren't relying on a lender to dictate whether or not they're offering you a "good" rate.
  2. Fix up your credit reports – Once you have a copy of your credit reports, you should look them over carefully for mistakes and inaccuracies. By disputing incorrect items and having them removed, you can improve your credit score without much effort. Every few points you can raise your credit score gets you closer to the best rate for your situation.
  3. Know your budget – Know exactly what you can afford before you start car shopping. This way, you're less likely to be swayed by a salesperson who assures you that any vehicle fits into your budget if you handle the loan right. Sure, a car that's normally outside your price range can fit into your budget if it's being financed for seven years or more, but only focusing on the monthly payment can end up costing you thousands more than necessary. To make sure a car loan and auto insurance fit into your monthly budget, you can calculate your debt to income and payment to income ratios – a lender does this as part of their approval process.
  4. Plan for a big down payment – Saving up a substantial down payment is one of the best things you can do to help yourself get approved for an auto loan. The more money you put down, the less you have to finance, and the lower your interest charges. Lenders like to see people put some “skin in the game," so to speak, and the more of your own money you can invest, the better. In fact, if a lender is on the fence about approving your loan, a larger down payment might be just what they’re looking for to say “yes.”
  5. Be flexible – Don't fixate on one particular color, or a feature that you just can't live without. When you have less than perfect credit, it's not the time to shop for your dream car. You should look for a reasonably priced new or used vehicle with a good safety rating, good fuel economy, and that meets your driving needs. For instance, if you have your heart set on a $45,000 truck, but you don't need to haul anything, and have an hour or more commute every day, you may want to consider a vehicle that more closely matches your needs. Then, after your credit improves with this loan, you can look into the luxury of getting the car you want, instead of a car you need.
  6. Shop for the best rates – To get the best interest rate possible, make sure to shop around. If you limit your shopping to a 14-day window, multiple inquiries show up on your credit reports as just one hard inquiry.
  7. Have a cosigner on standby – A cosigner isn't always necessary, but can be a big help if you've got a lower credit score. Being a cosigner is a big responsibility, because the friend or family member that agrees to help you is putting their credit on the line. Your cosigner should have good credit, and meet the lender’s income and debt requirements. They don't have ownership rights to your vehicle, but they do agree to make payments if you can't or don't, and their credit is affected alongside yours throughout the loan.

Let Us Help You Get Started

Here at CarsDirect, we work with a large network of special finance dealerships that have lenders on hand to help people in many different credit situations. So, if you're struggling with below average credit, and want a shot at an auto loan, simply fill out our no-obligation car loan request form now, and we'll get to work connecting you with a local dealer today!

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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