How You Can Get an Auto Loan with Bad Credit

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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.


, - February 20, 2019

Getting an auto loan with bad credit shouldn't be a source of stress in your life. Sure, there are a few more steps to take and a few more things to button up when your credit's not the best. But if you know what to expect, it should be smooth sailing. Read on for tips on how you can get a car loan with bad credit.

How Do I Get a Bad Credit Car Loan?

Credit scores are the basis for approval for most traditional auto loans, but lenders that work with bad credit understand that there's more to your credit situation than a number. These lenders look beyond your score to other factors that can let them know you're willing and able to take out a car loan and complete it.

If you already know that you aren't going to qualify for an auto loan through traditional lending channels, a second chance car loan with the right lender can help. But, you should know what the lender's going to see when they look into your credit. So, the first thing you need to do to get a bad credit auto loan is know exactly how bad your bad credit is.

This means getting both your credit score and your credit reports. When you know what the lender is looking at, you know when they're trying to dictate your credit, or make you think you deserve a higher interest rate than should be available to someone in your credit range.

More Tips for Getting a Car Loan with Bad Credit

Once you know your credit score, you can prepare for applying for a car loan in earnest. Here are the other steps you should take:

  1. Budget – It's very important to stick to a budget when buying a vehicle. You don't want to take out a loan that you can't comfortably complete. To ensure you don't overpay, try and spend no more than 15 to 20 percent of your pre-tax monthly income on a loan payment. You also shouldn't plan to take out a car loan if you have more than 50 percent of your income already set aside for monthly bills.
  2. Have a down payment – A down payment goes a long way toward showing a lender you're willing to invest in your own success for an auto loan. Lenders that work with bad credit buyers typically require at least $1,000 or 10 percent of the vehicle's selling price as a down payment, whichever is less. You should use the largest down payment you can, however, because the more money you put down, the more you save in interest charges down the line.
  3. Be flexible – When you have bad credit, sometimes it's a matter of taking what you can get to get you through. A bad credit car loan can have a higher interest rate than you may want, and may not be available for your perfect dream vehicle. But a bad credit auto loan can also help build your credit score if you make all your payments on time. This can help you get a better loan, on a better car, at a better interest rate the next time around.
  4. Consider a cosigner – If you can get a friend or family member with great credit to cosign on your loan, it might give you the boost you need for approval. In fact, some lenders may even require you to have a cosigner. But cosigning is serious business, so make sure you're both aware of the benefits and consequences of cosigning before signing on the dotted line.

Work with the Right Kind of Lender

Perhaps the biggest hurdle to getting a car loan with bad credit is finding the right lender to work with. Not all lenders can provide bad credit auto loans, and those that can only work through special finance dealerships that can be difficult to determine from the crowd. Don't drive from dealer to dealer looking for the right one to work with, team up with CarsDirect, instead.

We work with special finance dealerships all across the country that are teamed up with the lenders you need. To get started today, simply fill out our online car loan request form. Our process is fast, easy, free, and puts you under no obligation, so what are you waiting for?!

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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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