If you have bad credit, buying a car might feel out of reach—but it’s not. With the right steps and preparation, you can get approved for an auto loan even with less-than-perfect credit. In this guide, we’ll walk you through how to get a car with bad credit and boost your chances of securing a loan that works for you.
Why Your Credit Score Matters When Buying a Car
Your credit score plays a big role in determining whether you’ll get approved for financing—and what interest rate you’ll receive. A low credit score usually means higher interest rates, larger down payments, or the need for a co-signer. But that doesn’t mean you can’t get approved.
Step 1: Check Your Credit Score and Report
Start by checking your credit score through a free service or your bank. Then request your full credit report from AnnualCreditReport.com. Look for:
-
Errors that may be hurting your score
-
Delinquent accounts or late payments
-
Open balances and credit utilization
Tip: Dispute any inaccuracies to improve your score quickly.
Step 2: Set a Realistic Budget
Be honest about what you can afford monthly. A common rule is to keep your car payment under 10-15% of your monthly take-home income. Don’t forget to budget for:
-
Auto insurance
-
Maintenance and repairs
-
Gas and registration fees
Use online auto loan calculators to estimate what you can afford based on your credit score and potential interest rate.
Step 3: Save for a Down Payment
A larger down payment reduces the loan amount and shows lenders you’re serious, even with bad credit. Try to save at least 10% to 20% of the vehicle’s value. A strong down payment can help:
-
Lower your interest rate
-
Improve your approval odds
-
Reduce your monthly payment
Step 4: Get Pre-Approved for a Car Loan
Before heading to the dealership, shop around for pre-approval offers. Some lenders specialize in bad credit auto loans, including:
-
Credit unions
-
Online lenders (like Capital One Auto Navigator or Auto Credit Express)
-
Subprime lenders
Getting pre-approved gives you a better idea of your loan terms and helps you negotiate confidently.
Step 5: Consider a Co-Signer (If Needed)
If you’re struggling to qualify on your own, a co-signer with good credit can boost your chances. Just be aware that:
-
They’ll be responsible if you miss payments
-
Their credit could be affected by your loan
Only ask someone you trust, and be sure you can meet the payment terms.
Step 6: Choose the Right Car
Look for a reliable, budget-friendly used car rather than a brand-new vehicle. Your focus should be on affordability and dependability. Certified pre-owned cars from dealerships often come with warranties and financing options.
Avoid:
-
High-mileage vehicles with unknown histories
-
Flashy upgrades that increase costs
Step 7: Shop Around and Negotiate
Don’t accept the first offer you receive. Compare interest rates, loan terms, and total loan costs from multiple lenders or dealerships. Always negotiate the price of the car, not just the monthly payment.
Pro Tip: Bring your pre-approval and let the dealership try to beat it.
Step 8: Read the Fine Print Before Signing
Before you sign anything, carefully review the loan terms, including:
-
Interest rate (APR)
-
Loan length
-
Total repayment amount
-
Fees or penalties
Avoid long-term loans (72+ months) that result in paying significantly more in interest over time.
Final Thoughts: You Can Get a Car with Bad Credit
Bad credit doesn’t mean you have to put your car ownership dreams on hold. By following this step-by-step guide, doing your research, and preparing financially, you can get approved for a car loan that suits your needs—and even start rebuilding your credit in the process.
