Can I Still Buy a Car With Medical Bills?

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Even with poor credit.

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Content Manager

Bethany Hickey is 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 - October 1, 2021

Having medical bills on your credit reports could impact your ability to qualify for an auto loan – and it doesn’t have anything to do with your personal health.

Medical Bills and Your Credit Reports

You can buy a car with medical bills, but it may depend on the status of those accounts and the lender you’re working with.

By the time a medical bill hits your credit reports, it usually means it’s in collections. Medical providers keep a patient’s medical bills in their own system, often up to 120 days, until they hand them over to a collection agency.

If a collection agency gets one of your medical bills, it's reported on your credit reports, so it can impact your car buying ability and hurt your credit score. An unsolved account in collections can be seen as a red flag to many lenders. To an auto lender, one of their biggest concerns is your ability to repay money on time – and an account in collections doesn’t bode well for you.

Normally, medical bills aren’t included in your debt to income (DTI) ratio, which is the formula lenders use to see how much income you have available to repay a car loan. However, accounts in collections may be included – this varies by lender. So if too much of your income is being eaten up by repaying other bills or monthly obligations, it could mean getting denied for vehicle financing.

If a lender’s stipulations are strict and you have medical bills in collections, you may struggle to qualify for a car loan. This is often the case with traditional lenders such as banks, credit unions, and the captive lenders of automakers.

However, some bad credit auto lenders may consider this scenario as “situational bad credit,” and you may have a higher chance of qualifying for a car loan with a lender that specializes in these circumstances.

Situational Bad Credit and Subprime Lenders

Having situational bad credit means you used to have a good credit history, but life events created a lower credit score. Common circumstances that create situational bad credit can include:

  • Medical debt
  • Divorce
  • Bankruptcy
  • Job loss

This list isn’t exhaustive, but medical debt is a common reason for a bad credit score. Additionally, overwhelming medical debt is one of the biggest reasons for filing bankruptcy.

Subprime lenders often assist borrowers in circumstances like this. If you can prove you have the available income to repay a car loan, your negative marks on your credit reports may not be a deal-breaker. These lenders use other factors, alongside your credit score, to determine your auto loan eligibility.

Ready to Start a Car Loan?

For borrowers with credit challenges, it can be difficult to find a dealership that has the right resources. Here at CarsDirect, we want to help you on your car-buying journey. Using our coast-to-coast network of special finance dealerships, we’ll look for a dealer in your local area that’s signed up with subprime lenders.

Start right now by completing our free car loan request form.

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, Content Manager

Bethany Hickey is 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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