Tips on How to Buy a Car with Bad Credit

Get Car Financing
Even with poor credit.


Content Manager

David Topham is the 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.

, Content Manager - August 2, 2018

You might be wondering about how to buy a car with bad credit. If your credit is less than perfect and you need an auto loan, we're ready to assist at CarsDirect. We’ve been helping consumers in all kinds of credit situations find automotive financing since 1998. But helping you get financed isn't enough. We also want you to understand and get through the process of buying a car with bad credit with confidence – and you can do that with these tips.

How to Get a Car Loan with Bad Credit

Getting a car loan with bad credit is a little different than it is for borrowers with good credit. You'll want to make sure you're extra prepared and ready. This list of tips for how to buy a car with bad credit is a great place to start:

  • Check Your Credit – One of the first things you should do when preparing for a car loan is look at your credit reports and view your credit scores. Your credit reports provide a detailed history of your credit activity compiled by the three biggest credit reporting agencies: TransUnion, Equifax, and Experian. You can request your report from each credit bureau for free once every 12 months at Your credit score, on the other hand, is a three-digit number that measures your creditworthiness at this moment in time, and it impacts your ability to get approved for a car loan as well as the interest rate you might qualify for. You can get your credit score from many different providers, but we suggest purchasing your FICO credit score, as this is the one most lenders use.
  • Research Terms to Expect – A big reason why you want to understand your credit is to get a better idea of what to expect when you apply for a loan. You can research what interest rate buyers in your credit score range typically qualify for by checking out Experian's quarterly State of the Automotive Finance Market report for the latest information. You shouldn't assume anything or take anyone else's word for where your credit stands when it's easy to check it yourself.
  • Improve Your Credit Before Applying – If you're not satisfied with where your credit stands, working to improve your credit before you apply for a loan can help. Credit improvement isn't going to happen overnight, so doing this will only help if you don’t need a car loan immediately. You can take steps like paying all bills on time to establish a better payment history, catching up on past due accounts, paying down credit card balances, and disputing errors on your credit reports. Any score improvement will make it easier to qualify for a loan as well as a better interest rate.
  • Set a Budget – Take a close look at what you spend every month compared to your income. The last thing you want to do when your credit is imperfect is overextend yourself on a large purchase like a vehicle. You need to know what you can afford to pay, set a budget, and stick to it. A good tip is to use the 20 percent rule: no more than 20 percent of your monthly income should go toward all car-related expenses, including the payment, insurance, fuel, maintenance, and repairs. A rule like the 20 percent rule should help you identify the price range of vehicles you should be looking at. When you need a loan with bad credit, it's in your best interest to make sure you get a vehicle you can comfortably afford.
  • Don't Forget the Total Cost – At the same time as considering your monthly budget, you're going to want to consider the total cost of financing. Look at the interest charges you're going to be paying over the loan term, and the total cost compared to the price of the car. You can use online calculators to see how changing your down payment, loan term, and vehicle price influence the total cost of the loan. You'll find that choosing a shorter loan term helps you save money in the long run, despite the fact that it results in a higher monthly payment. The shorter your term, the less you pay in interest charges, which can make a big difference on a bad credit car loan.
  • Save up for a Down Payment – Most subprime lenders require a down payment if you have poor credit. It not only helps you get approved, but putting money down saves you money in the long run. A down payment will lower the amount you have to borrow, reducing the interest charges you’ll pay over the loan term.
  • Read All Paperwork Carefully – All of the loan paperwork involved can be confusing, but it's important that you understand what you're agreeing to. Our advice is to read everything twice, ask questions, and make sure you understand what you're agreeing to before signing anything.
  • Try to Get Pre-approved – Most direct lenders aren't willing to finance applicants with bad credit, but it doesn't hurt to try. If you have a relationship with a bank or belong to credit union, start there and see if they can pre-approve you. This gives you a maximum loan amount, so you know what you can spend and pick a car based on it. Plus, you can go to a dealership(s) to see if they can give you a better offer.

Get Connected to the Right Dealership

Finding a dealership that can help you get financed when your credit is less than perfect can be a challenge, but we want to make it easier. At CarsDirect, we work with a nationwide network of special finance dealerships. These dealers specialize in assisting car buyers with bad credit, and we can make getting connected with one in your area a breeze.

Buying a car with bad credit is easier when you come prepared, and these tips can help you get ready. And when you're organized and all set, we can help you get matched with a local dealer. Start the process today by filling out our free and easy auto loan request form online.


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, Content Manager

David Topham is the 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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