Where Can I Get a Car Loan with Poor Credit?

Get Car Financing
Even with poor credit.


Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.

, Contributing Writer - July 11, 2018

You may think that poor credit will stop you from getting approved for an auto loan. While many lenders are unwilling to finance bad credit borrowers, there are subprime lenders that work with car buyers with less than perfect credit. Their requirements to qualify may be stricter, and the loan may come with a higher interest rate, but you can use a subprime auto loan to buy a car and raise your credit scores even if you have bad credit.

Here are a few places you can look into to get a car loan with poor credit:

Banks, Credit Unions, and Other Direct Lenders

The majority of lenders are of the direct variety, which means you can apply with them to get financed. The advantage of applying with a lender directly is that you can get pre-approved for a maximum amount, so you get a set price range to shop for vehicles in. This is also helpful because you can use the loan at a dealership or for a private sale.

However, banks, credit unions, and the majority of other direct lenders tend to stay away from borrowers with poor credit. It's typical for them to have a strict credit score cutoff point. You won't qualify for direct lending if your credit score falls below their acceptable range. The range varies from lender to lender, but is typically when your credit score is around 600 and below.

While getting financed with a direct lender is more difficult with bad credit, you should still try to get pre-approved with your personal bank or credit union. If you have a relationship in good standing, it's possible they'll be more lenient. If unsuccessful, you'll have to look elsewhere for financing, like CarsDirect.

In-house Financing Dealerships

At the other end of the spectrum, for people who are struggling with really poor credit, going to an in-house financing car dealership may be the best bet. The dealer is the lender at these types of car lots, so you take out your loan from the dealership where you buy the vehicle. Because of this arrangement – where the dealership doesn't rely on third-party lenders – these dealers often don't check your credit.

While the availability of loans is a boon for borrowers struggling with credit issues, in-house financing dealerships may not report loans or payments to the credit bureaus. This means the car loan won't help you improve your credit score, unlike one with a subprime lender may be able to. Before agreeing to any loan with a dealership that finances in house, make sure to ask if they report to the credit bureaus.

Dealership Financing for Bad Credit Borrowers

Somewhere in the middle are special finance car dealerships, which are often the best place for borrowers with poor credit to get an auto loan. These dealers are signed up with subprime lenders – those that are willing to finance buyers with bad credit – that use factors in addition to credit to qualify applicants.

At a special finance dealership, you'll sit down with the finance manager to discuss your situation. You’ll fill out an application, which they transmit to the lender (or lenders) that fit your credit profile, to try and get you approved. The lender sets the terms of the loan, and you can choose from the vehicles on the dealer's lot that you qualify for.

Unfortunately, almost every subprime lender is an indirect lender. It can be difficult to find one because you can't apply directly with them. Instead, they only work through these special finance dealerships that are signed up with them. You need to find one of these dealerships to get financed through a subprime lender, which is something CarsDirect can help you with.

The Bottom Line

While banks and credit unions can be strict with credit, and loans from in-house financing dealers may not help you improve your credit, special finance dealerships that are signed up with subprime lenders give borrowers with poor credit a chance to get financed and improve their credit at the same time through on-time loan payments.

CarsDirect can help you get matched with a dealership near you that specializes in working through challenging credit situations. We've helped millions of people in the past, and you can be next if you start by filling out our auto loan request form. Our service is free of cost and obligation, so you can get started with confidence right now.

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, Contributing Writer

David Topham covers the automotive and auto finance industries as the Content Manager of Auto Credit Express who also contributes to CarsDirect. He was born and raised in Michigan and is a graduate of Michigan State University.

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