Buying a Car With Bad Credit

How to Get the Best
Auto Loans with Bad Credit


Tips for buying a car with bad credit. How to get the
best auto loans with bad credit. Easy auto loan application.


Buying a car with bad credit, or even no credit, can be challenging to say the least...

  • Where do you apply for the best auto loans with bad credit?
  • How do you know if you are getting the best rates?
  • What kind of car can you buy?
  • What terms will you qualify for?

And on and on...

No need to worry though, just follow the advice below and you'll find it's not quite as challenging as you may think. Heck, once you're done here you'll be a car buying pro!

Here's what is covered below:

  • The five bad credit tiers
    • No Credit, No Credit Score
    • E Tier - Below 520 Credit Score
    • F Tier - 520 to 559 Credit Score
    • D Tier - 560 to 599 Credit Score
    • C Tier - 600 to 640 Credit Score

  • Where to apply based on your credit
  • How much you can expect to be approved for
  • What types of interest rates you can expect
  • What type of car you "can" buy vs. what you probably "should" buy
  • What you'll need to fund your loan (it's not yours until it's paid for)

The Five Bad Credit Tiers

It's important to note that credit score is not the only factor that lenders look at when you're buying a car with bad credit. In fact, some sub-prime lenders don't even take your credit score into consideration at all.

That is not to say that they will offer no credit check car loans, but your score doesn't mean much to them. They will still look at factors like:

  • Your monthly income
  • Payment to income ratio
  • Debt to income ratio
  • Job stability
  • Residence stability
  • Prior auto loan payment history
  • If you are a homeowner
  • The loan structure

And, certain situations, like if you are buying a car after bankruptcy, etc.

Your "Ability" to pay, "Stability" and "Past Credit History" (ASP) are what all those factors above come down to. Remember ASP, it will be referenced again below in the different credit tiers. Simply match your credit score with the appropriate tier below to get an idea of what to expect.

What's Your Credit Score? Find Out Free!

If you are not sure of what's on your credit report or you don't know your score, then you should get your Free Credit Score at TransUnion

No Credit, 0 Credit Score

With no credit score, you are not necessarily considered to be buying a car with bad credit, but are completely unproven and therefore fall into the sub-prime auto loan category.

It's 50/50 as far as a lender is concerned and the better your Ability and Stability the better your chances are for a decent approval.

You may be able to get approved with a credit union that offers a first time buyer program, but the problem will be finding one. There are thousands of credit unions across the country and they don't all offer these programs.

Your best bet however is going to be to work with a local dealership that has connections with multiple credit unions and can find one that fits best for your situation.

Fill out this easy, no credit Auto Loan Application to find car dealers in your local area that specialize in no credit auto loans.

Another resource if you want to try to go it alone is to use this Credit Union Locator to find credit unions near you and contacting each one individually. Just keep in mind it will require a lot of leg work on your part to find the right one.

Best Case Approval (approximate):

Down Payment = $0
Interest Rate = 12-15%
Loan Amount = $8,000-$12,000 (depends on ASP)

Worst Case Approval (approximate):

Down Payment = Up to 20%
Interest Rate = 16-22%
Loan Amount = $4,000-$8,000


Below 520 Credit Score, E Credit Tier

If you fall into this tier, you are not going to be buying a car with bad credit on your own. You will have to work with a dealership to get approved, but don't worry, there are lenders that offer guaranteed auto financing.

There are no lenders, that I am aware of, that will lend direct to customers with credit scores under 520. They will only lend you money if your loan is arranged through an approved car dealer.

To find dealers in your local area that specialize in arranging the best auto loans for bad credit in the E credit tier simply complete this bad credit auto loan application: Apply Today---and Drive Away Tomorrow!

Best Case Approval (approximate):

Down Payment = $500
Interest Rate = 18-22%
Loan Amount = $8,000-$25,000 (depends on ASP)

Worst Case Approval (approximate):

Down Payment = Up to 30%
Interest Rate = 23-30%
Loan Amount = $12,000 or less (depends on ASP)


520 to 559 Credit Score, F Credit Tier

As with the E tier above, buying a car with bad credit in F tier is going to be difficult if not impossible to do on your own. You will most likely need to work with a dealership to get approved. Even if you could get approved on your own, you'd probably get a better approval using the dealerships lender.

Fill out this quick and Free Auto Loan application and you'll be connected with loan specialists in your local area that can help you get the best auto loans for bad credit.

Best Case Approval (approximate):

Down Payment = $500
Interest Rate = 16-20%
Loan Amount = $8,000-$25,000 (depends on ASP)

Worst Case Approval (approximate):

Down Payment = Up to 30%
Interest Rate = 21-26%
Loan Amount = $18,000 or less (depends on ASP)


560 to 599 Credit Score, D Credit Tier

There are more options available if you fall into D tier, but ASP really comes into play here. Again, your best bet is going to be to use a dealership to arrange your financing. They will definitely be able to get you the best auto loans for bad credit in D tier.

Of course, you could go it alone and I would suggest looking at Capitol One if that's what you decide to do. By the way, Cap One does not finance person to person auto loans and a dealership should be able to secure better financing even if you are approved.

You may also be able to get an auto loan with a local credit union, but you'll need to payoff any collection accounts that may be on your credit and strong ASP will be needed. A credit union is much less likely to approve you than Cap One or a dealers lenders, but it is possible.

The hardest way to get approved when buying a car with bad credit is to go it alone, but it may be possible. The easiest way to get approved is by filling out this quick bad credit auto loan application: Get an Auto Loan with our Free 60 Second Application.

Best Case Approval (approximate):

Down Payment = $0 (need solid ASP)
Interest Rate = 14-18%
Loan Amount = $8,000-$35,000 (depends on ASP)

Worst Case Approval (approximate):

Down Payment = Up to 25%
Interest Rate = 19-23%
Loan Amount = Depends on ASP


600 to 639 Credit Score, C Credit Tier

Many more options available to you here, but it's important to remember that credit score is not everything. A solid ASP means that you should be able to get approved through a credit union on your own if you choose to.

As with all the tiers above you are still going to find that a dealership will get you the best auto loans for bad credit in C tier. Get an Easy, Secure and Confidential Auto Loan Quote in 60 Seconds to see for yourself.

In fact, you're credit may not be all that bad if you fall into C tier and instead of buying a car with bad credit, you could almost say that you are buying a car with shaky credit.

It may be worth it to pay off some small collections, or pay down some credit cards, wait a month or two to get your score up and hopefully qualify for a lower level prime credit tier (better rates and terms).

Would you like to see your FREE Credit Score? Click to Find Out More! and see what might be holding your credit score down.

Best Case Approval (approximate):

Down Payment = $0
Interest Rate = 9-14%
Loan Amount = $50,000 or higher (depends on ASP)

Worst Case Approval (approximate):

Down Payment = 10 to 15%
Interest Rate = 15-18%
Loan Amount = Depends on ASP

Follow this link for a complete list of Credit Tiers. These include prime tiers so you can get an idea of where you want your credit to go.

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What Kind of Car "Can" You Buy

When buying a car with bad credit, you can essentially buy as much car as your loan was approved for. The difference between the car you "can" buy and the car you "should" buy often times is a matter of what you need vs. what you want and how much more it will cost to get what you want.

You could go out and buy that cool little BMW you saw for sale for only $25,000, but should you if you were approved at 18% (or possibly higher) and have to pay $10,000 or more in finance charges? That's a lot of wasted money to pay out and just makes some banker rich(er).

As long as you know how much you'll be paying in finance charges and if you are comfortable with that, then go ahead and buy your dream car. You'll also want to make sure the payments are very comfortable, because it will be very hard to trade out of this car without substantial down payment any time soon.

At 18% on, let's say a 6 year loan, it will take you roughly four years to ever break even on the car. You'll probably be in your last year of the loan before you have any real equity in the car. Don't say I didn't warn you!

Or, you could consider buying a car with bad credit with the intention of rebuilding your credit so that your rates are much better the next time around. Let's take a look at...

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What Kind of Car "Should" You Buy

When you're buying a car with bad credit, you'll tend to get more favorable loan terms with a newer car and lower miles.

Lenders tend to consider these types of cars less risk and therefore will offer better interest rates and longer loan terms (longer term helps to keep your payments down).

Cars 3-4 years old with less than 50,000 miles like a Chevy Cobalt or Malibu, a Ford Focus or Fusion, a Toyota Corolla or Matrix, etc. I know, not glamorous, but economical and easy to afford.

That being said, a longer term may not necessarily be what you want, but your interest rate, total finance charges and your monthly payments will be the ultimate determining factor here.

I know it may be difficult to settle with buying a car that's what you "need" and not what you "want," but when you're buying a car with bad credit you want to:

Crawl before you walk and walk before you run!

Look at it as a building process that, with timely payments, is building your credit up so that you can easily afford your dream car in the not so distant future.

Remember, you are not marrying this car, you are simply dating it until you build/rebuild your credit. Easy payments, economical and reliable for about 18-24 months (then look to trade) is important here.

You'll be able to buy with much better rates and much lower finance charges. This will save you thousands in the long run and help to keep your payments easily affordable.

The choice is yours and you'll want to choose wisely. If you have problems keeping up with your payments because you bought the big, bad SUV vs. the low payment minivan, or the super cool sports car vs. the economical, easy pay sedan, then you could damage your credit and be setting yourself up for failure for many years to come.

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What You'll Need to Fund Your Loan

Don't confuse buying a car with bad credit with simply signing a contract. Signing the contract is a legally binding agreement to the terms of the loan, but it doesn't mean you own it. In order to "buy it" you've got to pay for it. That happens once the deal is funded.

Here is what most subprime lenders look for to fund:

  • 5-10 References
  • Current Paystub
  • Proof of Residence
  • Proof of Insurance
  • Valid Drivers License
  • Complete Phone Bill (sometimes)
  • Customer Interview

If you have these items ready ahead of time you'll make the process of buying a car with bad credit much easier.

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Buying a Car With Bad Credit Summary

We've covered quite a bit here about buying a car with bad credit and there are a few key points that I want to leave you with:

  • Dealerships will almost always get you a better approval!

  • The more cash you can put down up front, the more vehicles you'll be able to choose from. Even if no money down is possible, you may be limited to a very short list of cars you can buy.

  • Cosigners can help to some degree, but are not necessary to get approved. There are lenders that 100% Guarantee Credit Approval, no matter how bad.

  • Most lenders will want a minimum of $1500 a month income, but some go as low as $800 a month.

  • Buying a car with bad credit does not end when you sign the contract. The loan must fund before you own it. To get the best auto loans with bad credit, go prepared with the items listed above in "What You'll Need to Fund Your Loan".

Lastly, when buying a car with bad credit remember to crawl before you walk and walk before you run and if you've got questions along the way feel free to contact me just below...

Have you applied yet? If not, what are you waiting for? Apply and Buy Today! Depending on the time of day, you could be driving your new car in hours.

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