What Are My Real Auto Loan Options With Poor Credit?

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Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

, Content Manager - May 4, 2021

There’s no reason to beat around the bush – if you have poor credit, you typically have fewer car loan opportunities. However, that’s not to say that you’re out of luck completely if you need a vehicle. Here are some realistic auto loan providers to look into with less than stellar credit.

Bad Credit and Auto Loan Providers

It’s no secret that having a lower credit score can make getting approved for a car loan tough. Your credit score serves as a way for lenders to quickly make an assessment of your creditworthiness, aka your ability to repay borrowed money. A lower credit score can give the impression that you’ve struggled with loans in the past, making a future lender wary to approve you for vehicle financing.

If you’re in need of a car but you have bad credit, here are some loan providers to consider for a realistic shot at approval:

  • Credit unions – These lending institutions are member-owned, and they tend to be a little more forgiving credit-score-wise in terms of auto loan approval. If you’ve been a member of a credit union and your accounts are in good standing, a credit union may be more willing to work with your less than perfect credit. They may or may not require a down payment, depending on the information on your credit reports, and the loan amount you’re looking to take on.
  • Subprime lenders – These third-party lenders are signed up with special finance dealerships. They specialize in credit challenges, so a myriad of bad credit borrowers seeks them out for a chance at a car loan. Are you a bankruptcy borrower, a new borrower, or you’ve just had credit struggles in the past? A subprime lender works with these situations and more – provided you meet the requirements and come prepared with a down payment.
  • In-house financing – If all else fails, in-house financing may save the day. In-house financing is done through buy here pay here (BHPH) dealerships, or tote the note used car lots. They only issue loans for used vehicles, and many completely skip the credit check. Have rock-bottom credit and need a car quickly? Then a BHPH dealer could be your solution. They do, however, almost always require a down payment, sometimes around 20% of the car’s selling price, and they still verify employment even if they skip the credit pull.

Ways to Increase Your Approval Odds

No matter which auto loan provider you choose to apply with, if your credit score has seen better days it’s a good idea to have a down payment prepared.

Down payments show a lender that you’re able and willing to repay the loan, and it puts some skin in the game. Borrowers that put money down on their car loans have a higher chance of seeing the loan to the end, and therefore a higher chance of getting approved despite having a damaged credit score.

Besides a higher approval chance, down payments benefit you as a borrower. They decrease your projected interest charges, lower your monthly payment, and can help keep your vehicle out of negative equity.

If you want to further increase your chances of getting a car loan, consider these additional tips:

  • Have a cosigner – A cosigner helps you get approved for an auto loan by promising to cover the loan if you can’t. They must have a good credit score, or at the very least, a score that’s better than yours. With someone else responsible for the loan balance that’s already proven their ability to repay loans successfully, it decreases the chance of the auto loan falling into default and increases your odds of loan approval.
  • Choose an affordable vehicle – It’s probably safe to say that everyone wants a good deal on their next car. But if you’re a bad credit borrower, it’s even more important to consider a reasonable loan amount that you can comfortably afford. Aiming for a brand new vehicle from a luxury automaker may not yield you the approval you’re looking for with a poor credit score. Focus on getting into a loan you can handle, repairing your credit, and proving that you can handle credit; then aim higher next time around.
  • Clean up your credit before applying – Full-on credit repair can take time, but that doesn’t mean you can’t take a look at your credit reports and clean up what you can right now. If you notice any errors on your credit reports while preparing for a car loan, file a dispute and get those inaccuracies removed with the credit bureaus. It’s also wise to know your credit situation so you can research what other borrowers are getting approved for in your own credit score range. You can request your credit reports for free weekly right now, by visiting www.annualcreditreport.com. Free weekly reports are available until April 2022 due to the pandemic.

Ready to Start the Search?

Not every dealership is able to assist poor credit borrowers and the ones that are sometimes tough to locate. But here at CarsDirect, we aim to make it easier for credit-challenged borrowers to find the resources they need to get the vehicle they want.

Start the search for a dealer by filling out our free auto loan request form. It’s quick, easy, and there’s never an obligation to buy from the dealership we connect you with. Get a jump on your car buying journey today!


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, Content Manager

Bethany Hickey is a Content Manager and Writer for Auto Credit Express, CarsDirect, and many other automotive blogs. She's a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. 

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