Advice for Buying a Car With Bad Credit

July 30, 2020 | by Jacob Hamilton

couple buying a car

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You need a job to pay bills on time and keep your credit healthy, and you need a car to get to your place of work. If you’re still working on the first part, you may be wondering: is buying a car with bad credit even possible? The short answer is—luckily—yes. While there’s no minimum credit required to buy a car, there are some extra precautions you should take before your purchase.

The downside to buying a car with bad credit is the likelihood that you’ll get a high interest rate. Before you head into the dealership, know your credit score, work to improve it before getting an auto loan and consider getting preapproved. When choosing your car, stay modest, and don’t expect to get the newest model. Additionally, opt for a larger down payment and a shorter loan period to get the best rates.

Can You Buy a Car With Bad Credit?

There are no credit requirements for purchasing a car—so even if yours is considered bad, the good news is you can still buy a vehicle. The downside to a subpar score is that you likely aren’t going to get a good interest rate on your loan.

average auto rates

Your interest rate can be improved if you later refinance the loan when your credit score is higher. Additionally, a cosigner on a loan can improve your rates. Budget to purchase the car with a large down payment and pay off more than the minimum each month to decrease the interest rate as much as possible.

What Credit Score Do Car Dealerships Use?

Car dealerships use the FICO Auto Credit Score model, ranging from 250 to 900. However, individual lenders can choose which credit score to use when evaluating the loan application. Your interest rate will depend on the scoring model from the credit report chosen.

What’s the Lowest Credit Score Required to Buy a Car?

There is no minimum credit requirement to purchase a car. Typically, a good credit score to buy a car is considered 660. Just keep in mind that you can expect to pay higher interest and insurance rates if your credit is considered low.

Tips to Buy a Car With Bad Credit

A bad credit score doesn’t mean you’re out of luck when you need wheels. You just need to be strategic about knowing your credit and improving it before getting a loan. Even if your subprime credit score lends itself to a poor interest rate, you can still work toward a better financial future.

credit loans bad credit

Know and Improve Your Credit

The first step to improving your credit score is knowing what yours is. Understanding where you stand in the eyes of lenders will better help you identify actionable steps to improve the score. Major factors that contribute to your credit score are missed payments, amounts owed, credit age and types of loans you have. Before applying for a car loan, check your credit and fix any errors found in the report.

Get a Preapproved Loan

You should read the fine print of any loan before agreeing to its terms, but it’s especially important to do so when you have bad credit. Consider getting your auto loan pre-approved before buying a car with bad credit. Visit nonprofit lenders, dealerships with flex requirements and banks to find the best rates.

Budget Properly

A budget can outweigh a daunting high interest rate when buying a car with bad credit if you plan it properly. Use auto loan calculators, choose a shorter loan period and get an estimate with expected rates before heading to a dealership.

how to buy a car with bad credit

Make a Bigger Down Payment

A larger down payment and shorter loan period can significantly decrease your monthly payments. Avoid further credit damage by opting to pay more up front for the vehicle to ultimately lower the amount you need to borrow from lenders.

Choose the Right Car

Choosing an inexpensive car paves the way for reasonable payments that you can pay in full each month. Don’t expect to buy the car on the lot with the most bells and whistles. Before choosing a vehicle, shop around. Avoid “buy here pay here” lots, which often have a reputation for selling vehicles for more than they’re worth.

Know the Current Interest Rate

Before heading into a dealership, check the aveaverage loan interest rate. Although you can’t expect to get the average rate with a subprime credit score, be wary of lenders who offer a rate at double or more than the average.

Sometimes bad credit can feel like a recurring nightmare that you can’t shake. Bad credit equals high interest rates equals defaulted payments, right? Not quite. Your financial future depends on your planning, and part of that is strategizing how you can improve your credit. That way, you might be able to make better purchases in the long term.

Sources: Experian | U.S. News |

Jacob Hamilton

Jacob Hamilton

GM of

With his master's degree from the University of Phoenix, Jacob has been working as the General Manager for for 2 years. Jacob is passionate about consumer finances and doing everything he can to make credit repair accessible....

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