Is There a Minimum Amount to Finance if You Have Bad Credit?

Get Car Financing
Even with poor credit.

By

Contributing Writer

David Topham is an Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands' properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.


, Contributing Writer - November 3, 2017

Consumers with bad credit who need a subprime auto loan typically need to finance at least $5,000, and there are reasons why this the case.

Why There's a Minimum Amount for Auto Financing

Subprime lenders will finance applicants with bad credit, but these loans have certain eligibility requirements. They typically won’t finance a vehicle older than 10 years or with more than 100,000 miles on the odometer – although this can vary among providers. Lenders also set a minimum loan amount, which is usually $5,000.

Lenders want consumers to finance a dependable vehicle, and these requirements ensure borrowers on tight budgets can’t purchase very old used cars, which have a greater chance of breaking down. Nobody wants to make payments on a car that’s no longer drivable or needs expensive repairs, and things can go south in a hurry in this scenario.

Don't Buy in Cash if You Want to Build Credit

When people with tight budgets hear about the minimum amount for bad credit auto financing, buying a cheap car with cash becomes a more tempting prospect, but there are drawbacks:

  • Older used cars are more expensive to maintain. Generally, vehicles require more upkeep the older they get. If a consumer buys an older used car to save money, it could end up needing expensive repairs earlier than a newer model. That begs the question of whether or not the older car is worth sinking money into, and all of a sudden the plan of saving by going cheap has backfired.
  • Buying with cash doesn’t help build credit. Borrowers with bad credit may need a loan of at least $5,000, but they can use it to improve their credit by making on-time payments.

Outside of those two reasons, getting an auto loan comes with added legal protections when consumers purchase and/or finance a vehicle at a dealership.

Where To Find Financing

Not many lenders are willing to finance people with less than perfect credit, which makes finding one a major obstacle to getting a car loan for borrowers with credit issues. CarsDirect wants to change that.

We've teamed up with a national network of car dealers that know how to handle challenging credit situations. Use our free service, and we'll connect you with a local dealership that wants to help. Get started by filling out our fast and secure car loan request form today.

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, Contributing Writer

David Topham is an Automotive Content Manager for Internet Brands. He works as the lead editor for CarsDirect and Auto Credit Express, and contributes to those sites alongside other Internet Brands' properties like The Car Connection. He was born and raised in Michigan and is a graduate of Michigan State University.


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